The relationship between purchasers and
providers of COPD
An agency theory perspective
January, 29, 2018
Master Thesis
MSc. Supply Chain Management
University of Groningen
Faculty of Economic & Business
Crijn Sijpkens
Student number: 2135205
c.s.sijpkens@student.rug.nl
Supervisors:
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ACKNOWLEDGEMENTS
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ABSTRACT
Purchasing organizations and providers of health care are together responsible for the availability of high quality and affordable health care. The organizations share this responsibility but have as a single organization different goals. These different goals arise during the annual procurement of health care. This research investigates the relationship between providers and purchasers of health care by using the perspective of agency theory. An explorative single case study in the procurement of COPD is executed to create a better understanding of this relationship. The research shows the complexity of the relationship between providers and purchasers of health care. The research also shows the trend that purchasers and providers are improving their relationship and this has a positive influence on their responsibility to ensure high quality and affordable health care.
Keywords: Health Care Procurement, Health Care Management, Integrated Health Care, COPD, Agency
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TABLE OF CONTENTS
INTRODUCTION ... 5
THEORETICAL BACKGROUND ... 7
Health care procurement ... 7
Market structure ... 7
Agency theory... 8
Agency theory in health care procurement ... 9
Integrated care procurement ... 10
METHODOLOGY ... 11
Case selection ... 11
Data collection ... 12
Data analysis ... 12
RESULTS ... 13
General Practitioner Cooperation ... 13
The hospital ... 14
The purchasing organization ... 15
The relation between the general practitioner group and the purchasing organization ... 16
The relation between the hospital and the purchasing organization ... 18
The relation between goals and trust ... 21
The relation between information asymmetry and information sharing ... 22
The relation between information sharing and trust ... 23
The relation between information asymmetry and trust ... 23
DISCUSSION ... 25
CONCLUSION ... 26
LIMITATIONS & FURTHER RESEARCH ... 27
REFERENCES ... 28
APPENDIX A – CONSENT FORM ... 31
APPENDIX B – INTERVIEW PROTOCOL ... 33
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INTRODUCTION
Purchasing organizations in health care are struggling in managing the health care sector since the introduction of market structures in the procurement of health care (Raad voor Volksgezondheid en Samenleving (RVS) 2017; Sheaff et al. 2015). Market structures were introduced with the advent of internal markets in health care. These internal markets should create competition between the different providers of care on topics as the quality and cost effectiveness. The role of purchasers is managing this competition through the annual procurement with the providers, but since the start of internal markets purchasers have struggled to fully embrace this competitive element between the providers (Addicott 2016; Figueras 2005).
Purchasing organizations and providers of care depend on each other in accomplishing their own requirements. A purchasing organization is required to purchase a certain amount of care and a hospital is required to deliver the required amount of care. Due to this dependence there is a relationship between the two parties, which can be seen as a buyer-supplier relationship. In this relationship, purchasing organizations are struggling to manage providers on the organization, costs effectiveness or quality of care. This is shown with the following example. In the Netherlands the costs of health care did increase the last years with an average of 6%, where 2% of these costs cannot be explained by demographic changes, increased labor costs or other developments in the health care sector (Van de Ven and Schut 2010). These rising costs are a signal that providers maximize their revenues by supplier-induced demand for services. Providers can do this by, for example, prescribing more expensive tests in situations where less expensive tests are sufficient (Bijlsma, Meijer, and Shestalova 2008). The fact that providers choose the more expensive option, while it is not necessary, is contradictory to the expected competition between the providers.
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powerful position (Bijlsma et al. 2008). Van de Ven and Schut (2010) state that purchasers of care should enhance their level of information to create a better balance of power between the purchasers and providers of care.
Theory provide some examples of solutions to enhance the level of information, by for example investing in information monitoring capabilities as external audits or information technologies, which can provide the principal with information about the behavior of the agent ((K. M. Eisenhardt 1989; Kerr and Lassar 1996). The existence of information asymmetry in health care is a signal that the organizations in health care do not succeed in reducing information (Bijlsma et al. 2008; Van Raaij 2016). In theory there is little guidance in how organizations deal with information asymmetry and how they can increase the level of information sharing (Manatsa and Mclaren 2008).
This research will investigate the relationship between a purchasing organization and primary care providers (general practitioners) and secondary care providers (hospitals). To investigate this relationship the procurement of Chronic Obstructive Pulmonary Disease (COPD) will be used. The procurement of COPD is relevant because COPD is a global health issue and COPD patients do not always receive the type care they need (Mannino DM 2007; Raad voor Volksgezondheid en Samenleving (RVS) 2017). COPD is a chronic disease and in the treatment and procurement of COPD primary care providers and secondary care providers are involved. Purchasers try to manage this collaboration through the procurement of integrated care, in this integrated care procurement they are dealing with the agency problems of conflicting goals and information asymmetry (Shaw, Rosen, and Rumbold 2011). The agency theory will be used in this research to create a better understanding of how the parties deal with information asymmetry and conflicting goals and how this influences the way care is organized. This results in the following research question and sub questions:
How are purchasers and providers of integrated care dealing with conflicting goals and information asymmetry?
o What is the influence on the way the care is organized?
With answering the research question this research will provide a better knowledge of how purchasers and providers of care manage information asymmetry and conflicting goals and the effect on the delivered care. The contribution to literature is a better understanding of how agency problems can be handled in the procurement of health care.
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THEORETICAL BACKGROUND Health care procurement
Purchasing of care is a process through which financers or funders of care select care providers, contract care providers and manage the relationships with providers (Figueras 2005). The health care triad (figure 1) is a useful method to further explain how care purchasing is organized. Purchasers of care select care providers in order to secure care capacity for their responsible population, but these care purchasers do not consume the care. Purchasing organizations can have contracts with citizens, municipalities or governments. As soon as citizens of this population need care they become a healthcare consumer. This is where the consumption of care and the delivery of the service take place.
In this research the focus is only on the role of the health care purchaser, which means that the relationships between health care providers and consumers are not in the scope of this research. Nevertheless it is important to have a full understanding of the health care triad, because one bilateral relationship in a triad cannot exist without the other relations in that triad (Wynstra, Spring, and Schoenherr 2015). Purchasers of care do each year
Figure 1. Health care triad contract providers, with this contract the purchaser (buyer) agrees that the provider (supplier) receives a compensation for specific types of care. This contracting of care providers should be a way to ensure that a population receives the care it needs. In contracts, the maximum amount of compensation and levels of quality are secured.
Market structure
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based system in health care could result in even higher costs (Zwanziger et al. 2000). Because of this Zwanziger et al. (2000) started an extensive research to the effects of selective contracting between 1980 and 1997 in California. Their conclusion was that due to growth of selective contracting the health care market became more competitive and the level of competition did decrease the cost. (Dranove and Satterthwaite 2000) confirm this result and state that there is “overwhelming evidence that selective contracting enables providers to obtain lower prices”.
Nowadays the discussion about market-based health care is moving towards the negative effects. An evaluation report about the introduction of market based procurement in the Netherlands in 2006 state that the system is not working as it was meant to be (Van de Ven and Schut 2010). Obstacles in this contracting are first of all the freedom of choice for patients. Purchasers are anxious that selecting a certain amount of providers will damage their position, because patients are used to the right that they can choose the provider they want. A second problem is the lack of transparency about the quality levels of providers. With the effect that there providers came up with an enormous list of quality indicators leading to a high level of bureaucracy (Van de Ven and Schut 2010). The third problem is that purchasers have no insights in the costs providers make compared with the need for care. Providers are able to provide extra or more expensive care than needed, without the knowledge of purchasers (Bijlsma et al. 2008). This lack of transparency in information and bureaucracy results in a less competitive market and makes it harder for purchasers to govern the providers. Purchasers try to manage these problems by attracting more knowledge into their organizations, an example of which is hiring former employees of providers.
The Raad voor Volksgezondheid en Samenleving (RVS) (2017) state that the relationships between the providers and purchasers of care are now strongly focused on costs and this focus on costs results in conflicts, no room for dialogue and extensive monitoring. The effect of this is that managing these relationships is now goal in itself, instead a way to reach to the goal of payable and obtainable care. Van Raaij (2016) confirms this with stating that the procurement of care is at the moment a zero sum game instead of a positive sum game. This all display the challenging relationships in the procurement of care.
Agency theory
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Agency theory describes the relationship between a principal and an agent. In the agency relationship the principal delegates work to the party, to describe this relationship the metaphor of a contract is used. The goal of the theory is to determine a contract which satisfies both parties and which can be used to govern the agency relationship (K. M. Eisenhardt 1989; Jensen and Meckling 1976).
Agency theory came up with a set of constructs that arise in the relationship and specially during a contracting phase; adverse selection, moral hazard, information asymmetry and incentive alignment (Fayezi et al. 2012). Adverse selection occurs because of the misrepresentation of the ability from the side of the agent, whereas moral hazard can be described as the lack of the agent’s effort to fulfill the principal’s order (Carter and Rogers 2008). Incentive alignment and information asymmetry are the two main problems used in agency theory. The first problem is about conflicting goals between both parties. Usually agents cause this problem, because the actions of the agent are driven by self-interest and opportunism. The second problem is about the difficulties for the principal to verify what the agent is actually doing, with the consequences that there is a different level of information availability between the two parties. (K. M. Eisenhardt 1989; Whipple and Roh 2010; Wright, Mukherji, and Kroll 2001; Zsidisin and Ellram 2003). Because information asymmetry is usual in favor of the supplier and the actions of suppliers are characterized by self-interest and opportunism, it is a challenge to create a contract that satisfies both parties.
Agency theory in health care procurement
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As mentioned earlier the principle of information asymmetry arises when hidden information or hidden actions arise between two parties. In health care there are significant information asymmetries between the providers and purchasers of care concerning the costs of care, quality of care, the need for care and about the cost-effectiveness of treatments (Bijlsma et al. 2008; Van Raaij 2016). These are not only situations where one organization has more and better information than the other, but there are also examples in which the information is not available at all. Purchasing organizations react to this problem by investing in monitoring techniques and signing on employees with a history at providers of care. This is because providers are not willing to share tacit knowledge and also react on the purchasers by hiring employees from purchasing organizations (Raad voor Volksgezondheid en Samenleving (RVS) 2017). An option could be to motivate agents to share information with the principal. An example of how principals can motivate agents is to share the benefits with the agent (Manatsa and Mclaren 2008).
Integrated care procurement
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METHODOLOGY
There is theory on the phenomena of information asymmetry and conflicting goals, but in the specific context of health care procurement in integrated care, theory is incomplete. Therefore, this research is expanding existing theory. A single case study is selected to conduct this research, because this type of study is useful for answering ‘how’ research questions (K. Eisenhardt 1989; Voss, Tsikriktsis, and Frohlich 2002). This is because a case study provides the opportunity to explore the phenomena of information asymmetry and conflicting goals in a real life context of integrated care procurement. This is useful because there is theory about how to manage these topics, but in practice this is not working in the complex setting of integrated care procurement. A single case study can create insights from practice and create understanding of the complexity in this practical context (Meredith 1998).
Case selection
To find the appropriate case, a theoretical sampling approach is used. In this approach the single case is selected in a purposeful manner instead of random to ensure the case satisfies the conditions to answer the research question (DiCicco-Bloom and Crabtree 2006; Edwards and Holland 2013). This means that the cases should provide information about how purchasers and providers of integrated care are handling information asymmetry and conflicting goals.
This resulted in the selection of Chronic Obstructive Pulmonary Disease (COPD) as type of care. COPD is a global issue and an important cause of morbidity, mortality and health care costs worldwide (Mannino 2007). A report about the procurement of care stated that COPD patients are not provided with the care they need due to procurement of care (Raad voor Volksgezondheid en Samenleving (RVS) 2017). Because COPD is a global issue and the criticism about the influence of procurement on the treatment of COPD, makes a COPD suitable type of care for this research. The procurement of COPD is investigated in a specific region with almost 600000 citizens in the Netherlands. In 2006 a market-based system of care procurement was introduced in the Netherlands. In this system private insurers are given the responsibility to annually purchase care from all types of care providers. In the treatment of COPD are providers involved from primary care; general practitioner, dietitian, physiotherapist, and providers from secondary care which are hospitals.
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Data collection
The data collection is done by a qualitative method in the form of semi-structured interviews. To ensure the interviews are executed in the right way an interview protocol is developed. The interview protocol had the following structure. First some general questions about the organization and the role of the interviewee were asked and after this three topics followed; the structure of the COPD treatment, the relationship between the provider and the purchaser and the role of information. The protocol did leave room for the researchers to be flexible in how and when questions were asked, depending on the response of the interviewee (Edwards and Holland 2013). All researchers were done face to face and seven out of the eight interviews were conducted by two persons.
Function Organization
Procurement Manager Purchasing
Medical advisor Purchasing
Procurement Manager Hospital
Pulmonary nurse specialist Hospital
Staff member Quality Assurance Hospital
General practitioner and medical advisor General practitioner cooperation
Manager COPD service Diagnostics and medical advice center
Physiotherapist Physiotherapist clinic
Table 1. List of interviewees
Data analysis
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Concept Description
Level of information sharing The relationship between the level of shared information with the other party compared with information that is not shared.
Level of information asymmetry The difference in availability of information, the knowledge to interpret the available information
Level of conflicting goals The relationship between conflicting and similar goals and the impact on the relationship between the parties.
Level of trust The level of trust in the goals and information of the other party.
Table 2. Overview of factors
RESULTS
In the first part of the results the roles of the general practitioner cooperation, the hospital and the purchasing organization in the treatment and organization of COPD will be explained. After this the focus will be on the purchaser-provider interaction. This will be achieved by describing the relationship between the general practitioner cooperation and the purchasing organization, and between the hospital and the purchasing organization. In describing these relationships four factors will be used; the level of information sharing, the level of information asymmetry, the level of conflicting goals and the level of trust. After the description of these interactions between the providers and purchaser the relationships between the four factors will be described.
General Practitioner Cooperation
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The start of the general practitioner cooperation was a driver for initiatives to reorganize the COPD care in the region. Reorganizing the COPD care in this region was necessary because at that moment general practitioners’ role was too small with regard to the treatment of COPD patients, these patients were now treated in a hospital or not treated at all. The primary care is suitable for the treatment of COPD patients, because in a large part of the treatment consists of regular controls and changes in lifestyle. Only the more severe patients need to be treated in a hospital. The cooperation consequently saw the opportunity to bring these COPD patients into primary care.
The first reason that general practitioners were not interested in COPD patients was the combination between a relative low amount of patients per general practitioner and a time intensive treatment that requires investments in materials and education. The second reason is the profile of COPD patients, who are often addicted to smoking and lack motivation to stop smoking, whilst smoking is the main cause of COPD. This makes COPD patients an uninteresting population of patients to take care of. The third reason is the stiff collaboration with hospitals. The treatment of COPD is a collaboration between primary care and secondary care providers, but the communication and agreements between these parties is rather difficult. An example of this is the (dis)agreement about when a patient is treated in the second line care or in the first line. General practitioners are afraid to send a patient to a hospital, because of the possibility that the hospital will treat the patient unnecessary long. Another difficulty is the communication between the organizations, for a general practitioner it can be hard to contact a pulmonary specialist in a hospital and the reports from the hospital to the general practitioner are sometimes incomplete or hard to understand. The following citation summarizes and confirms the reasons of above. “And it is of course not a sexy thing, COPD.
Most of the time they (general practitioners) are not interested in it at all, and all those people keep on smoking (Pulmonary nurse specialist).”
The hospital
Hospitals have different roles in the treatment of COPD patients. The most important role is the treatment and recovery of patients who had an acute lung attack, an exacerbation. The other roles are in the diagnostics of COPD and the treatment of the more severe patients. In the last years it has been argued that the treatment of COPD patients is now oriented too much on secondary care and should switch to primary care more often. There are several reasons why COPD patients are treated in the secondary care; of which will be explained now.
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care. The second reason is that the guidelines on when a COPD patient should be treated in a hospital or when the patient should be treated in primary care are not clear enough. “At the moment we are
working on creating indicators for substitution to primary care, because at the moment too many patients stick at the hospital (General practitioner and medical advisor).” The effect of this ambiguity
is that specialists have no clear guidelines and hence often choose to keep the patient in the hospital, since they are already treating the patient and want to ensure a good treatment. This is also the link to the third reason; the low confidence specialists have in the first line. Medical specialists have little confidence in general practitioners, as the latter is not always interested in COPD patients, resulting in limited knowledge and capacity of primary care for COPD patients. “It was also about the problem that
general practitioners did not always discussed the results from the hospital with the patient. (Quality assurance staff member).” This low confidence is strengthened by a lack of transparency about what
a general practitioner is doing. The general practitioner is not obligated to keep the pulmonary specialist updated on the treatment of the patient. The final reason that COPD patients stay in the hospital is due to the patients themselves. Over the years COPD patients are often treated in the hospital and they are satisfied with the treatment and get used to it. Sometimes patients have the telephone number of the specialist or lung nurse, which show how familiar they become with the people who treat them.
All the above reasons explain why the substitution of COPD patients from the secondary care to the primary care is difficult.
The purchasing organization
Through procurement of COPD care from the hospitals and the general practitioners, the purchasing organization has a role in the organization of the COPD care. Through this procurement they can stimulate changes in COPD care delivery, because the providers are dependent on the money they receive for their treatments.
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another maximum volume that they defined as care that should be substituted to primary care in the future and the hospital is not allowed to increase the volume of these types of care. These agreements are quite new and are made for four years, aiming to give the hospitals some time to prepare themselves to lower or stop types of care that the purchaser wants to substitute to primary care. COPD is a type of care that should be substituted to primary care from the perspective of the purchaser. The agreements with general practitioners about the financing structure are relatively simple. The first option of financing is the regular way general practitioners are financed, meaning that a general practitioner can declare every single consultation at the purchasing organization. The general practitioner and the purchasing organization need to agree on the price per consult. The second option is that both parties agree on the structure of integrated care. This integrated care is organized by the general practitioner group. In the system of integrated care the general practitioners receive a fixed amount per COPD patient that joined integrated care. In this integrated care also other first line organizations, for example a dietitian, are involved. The primary care organizations need to make agreements among themselves on the division of the budget. Most of the time the general practitioner is in control of this. The advantages of this integrated care are a better collaboration between the different organizations and an increase in the certainty of a structural income for a general practitioner.
In the above paragraphs the role of the different organizations and the difficulties in the coordination of COPD between primary and secondary care were explained. In the next section the role of the purchasing organization in managing its relationships with primary and secondary care providers will be described. Four parameters are used to describe the relationship between the purchasing organization and the providers of care, these parameters are; the level of conflicting goals, the level of information sharing, the level of information asymmetry and the level of trust.
The relation between the general practitioner group and the purchasing organization
Level of conflicting goals
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lifestyle of a patient are important. A general practitioner is more involved in the personal life of a patient in comparison to a specialist in a hospital. The general practitioner cooperation agrees with the purchasing organization on the part that the treatment of COPD is a type of care that should be delivered by a general practitioner and not in the hospital. Furthermore they see it as a profitable type of care for general practitioners when the amount of patients increases.
To conclude, both parties have the same goals about the substitution of care the level of conflicting goals is low. Therefore they can be seen as a partner in developing the COPD care and decreasing the costs of it.
Level of information sharing
In the interviews both parties mentioned they could not think of information they do not share with the other. The general practitioner cooperation shares information about the quality of all single general practitioner clinics, about the national indicators of COPD and financial reports about the delivered care and the general practitioner cooperation. The purchasing organization is transparent in their vision about how they want to invest in primary care and how they want the relation with the general practitioner cooperation to be. The level of information sharing can be stated as high. This results in a very open and transparent relationship between the two. An example is the transparency of the costs of delivered care, when less care is delivered than expected the cooperation compensate this with the purchaser. While this sounds quite logic, both parties and also a third party state this is a quite unique situation. This is unique because there are examples of providers who try to maximize the compensation from the purchaser.
Level of information asymmetry
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The second factor that influences the level of information asymmetry is the level of knowledge about the delivered care, which is essential to interpret and use the shared information. This level of knowledge is lower at the purchaser, because the procurement managers at the purchasing organization have no health care education and are not involved in the day-to-day delivery of care. The procurement managers at the general practitioner cooperation are besides procurement manager also general practitioners; therefore they are educated and have practical knowledge of the delivered care. In this case information asymmetry exists at the purchasing organization and the general practitioner cooperation has an advantage.
To conclude there is low information asymmetry at both sides due to the fact that on both parties have difficulties in interpreting the information and because the information asymmetry is present on both sides there is a quite equal level of information asymmetry.
Level of trust
The level of trust between the organizations is stated as high. An important factor for this relationship is that both parties mentioned the high level of trust in the other. The high level of trust is confirmed by the transparency in information sharing between the organizations, both parties also mention they have no information they would not share with the other organization. The last factor that shows the high level of trust is the long term view both organizations have. They emphasize the importance of this long term policy and know they need each other for this.
The relation between the hospital and the purchasing organization
Level of conflicting goals
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The purchasing organization is supported here by the ongoing national debate about the health care costs. These days the hospitals realize they are a social organization and they have to revise their organizational structure. Another factor influencing this revision is the high demand of secondary care. This combination of factors resulted in the following trend. First of all academic hospital decided to focus only on complex second line care, which they say should be the core business of an academic hospital. The academic hospital is decreasing normal second line care, with the result the academic hospitals experience an increase in these types of care. This increase of demand at non-academic hospitals creates possibilities to substitute basic care, for example COPD, to primary care. This trend is out of the scope of the purchasing organization, but is supporting the purchasing organization to substitute COPD care from secondary to primary care.
To summarize there are conflicting goals between both organizations, but due to the new type of agreements and the trends in the secondary care the level of conflicting goals is downsizing. In the end the level of conflicting goals can be defined as medium.
Level of information sharing
The level of information sharing between the hospital and the purchasing organization is relatively low. During the annual contracting negotiations, the purchasing organization share their procurement policy and the hospital delivers a first proposal about their innovations and developments. Sharing information about quality of care are a difficult topic due to the discussion about the definition of quality in health care and how to measure this. In COPD is for example the life-style of a patient an important influence on the effectiveness of the treatment. Sharing information about the costs is also a problem, because hospitals also have problems with measuring this. “They still don’t the costs are
and that is the same as what you always hear, how is it possible that the price in this hospital is x and another hospital y. This is because they start calculating these costs after the annually budget agreements (Procurement manager purchasing organization).” Hospitals define the prices of the single
care types after they know what their budget is for the next year instead of the costs per type of care. When the hospitals are able to present information they are dealing with the problem how to present it to the purchaser, because they argue the purchaser can only interpret the data when it is delivered in some kind of model or numbers so they can analyze it. Delivering the data about quality was already a problem for the hospital and delivering quality in numbers and models are even harder.
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Level of information asymmetry
The level of information asymmetry is influenced by a several factors. First of all there is information asymmetry in the level of medical knowledge. On both sides the procurement managers are people who do not have a medical education, which is a disadvantage for both sides and for the complete relationship. Though there is information asymmetry on the side of the purchasing organization. This is due to the fact the procurement manager of the hospital receives the knowledge from all the specialists in the hospital. The procurement manager at the purchasing organization has five medical specialists with some medical knowledge. This results in a different level of medical knowledge between the parties and information asymmetry at the purchasing organization. The level of medical knowledge is quite important due to the complexity and large amount of care delivered in a hospital. Information asymmetry at the level of available information is at the side of the hospital. This is because the purchaser receives from over the 100 hospitals all the procurement information and also all the information they have from the declarations of patients. The hospital has a relationship with nine purchasing organizations and receives from them the procurement policies and proposals. This results in a lower level of available information at the hospital, which is a disadvantage because it is harder to benchmark the received information.
Due to the differences in medical knowledge and available information there is a high level of information asymmetry. The information asymmetry is at both parties, but it is hard to argue which party is in favor due to the information asymmetry. That is hard to argue, is confirmed in the interviews because both parties stated that the other organization has more information and has an advantage because of it. Henceforth, the conclusion is that the level of information asymmetry is high at both parties.
Level of trust
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Purchaser – General Practitioner Group
Purchaser – Hospital
Level of information sharing High Low
Level of information
asymmetry Low High
Level of conflicting goals Low Medium
Level of trust High Low
Table 3. Overview of the factors levels in the two relationships
The relation between goals and trust
The level of conflicting goals influences the level of trust between the parties, but also the level of trust influences the level of conflicting goals. This makes the relationship between these two factors reciprocal.
The influence of trust in the level of conflicting goals is shown in the relationship between the purchaser and the hospital. The trust in the other party was on a very low level, which had the effect that the parties only had attention for the 10 percent of conflicting goals and had no attention for the other 90 percent of goals they did share. The reason for this is the high level of prejudices about the other party, or in the words of the procurement manager of the hospital: “So yes, we have more in
common than we think, but there is a lot of energy needed to understand this because the prejudices and images are enormous.” Another example is the one between the purchaser and general
practitioner group, they argue trust is the start of the positive relationship and the reason they have attention for the goals and interests of the other party and have trust in their goals.
The influence of conflicting goals on the level of trust is seen in the negotiations between a hospital and the purchaser, the level of conflicting goals between these parties is defined as low and this also results in a low level of trust in the negotiations as well. “At that moment I thought screw you, this is
ridiculous, what are you thinking?” This was the reaction of the procurement manager after a proposal
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The main element of this relationship is about how visible and similar are the goals of the other party, consequently this influences the trust in the relationship. And on the other side what the level of trust in the other organization is, which increases the visibility of goals and the chance on similar goals. In the relationship between the purchaser and general practitioner group the level of conflicting goals is low since both parties have a similar and visible goal: investing in primary care. This resulted in the awareness of both parties of this similarity and positively influenced the level of trust. Both parties argue that trust was the beginning of the positive relationship, but this could also be the visible similar goal. This is a difference compared with the relationship with the hospitals. The goals of both parties were more complex and there was no attention for the other goals. This could be the reason for the low level of trust. After the intervention of the third party, similar goals emerged and the trust between the two parties increased.
The relation between information asymmetry and information sharing
First of all the level of information sharing influences the level of information asymmetry in a positive way. Simply put, the level of available information increases on both sides, which reduces the level of information asymmetry. Besides this there are some factors in information sharing which influence this relation. The first factor is the way information is shared, because there can be differences in how parties use the information, for example due to difference in qualitative or quantitative data. “We need
to make the information we have more concrete, we are not able to deliver the information in such a way, the purchaser is able to use the data (Procurement manager hospital).” In this example it is about
that a purchasing organization only can use information when it is quantitative, so in numbers and they can use it in a mathematical model. This displays that the way information is shared influences the level of information asymmetry, because when the other party is not able to use the information, the level of information asymmetry will not decrease. Another factor is the level of medical education that is needed to interpret the data, because when you are not able to interpret the shared data due to a too low level of knowledge information asymmetry will remain on same level. The last factor of information sharing is that there is a time lag in the availability of the information. In health care this time lag is seen in the declaration data, purchasers sometimes receives this data only a year after afterwards. This is still lowers the level of information asymmetry, but the hospital did have an advantage of a year and sometimes the data is not even relevant anymore.
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The relation between information sharing and trust
The level of trust influences the level of information sharing, because a party will share more information when they trust the other party will use the information in a positive way, which is shown in the following example. “You, as the secondary care, are terrified that you will cut down because they
have information they can use (Pulmonary nurse specialist).” The effect is also seen between two
different hospitals and the purchasing organization. The trust in one hospital is higher compared to the other hospital and the purchaser receives more information from the hospital with the higher level of trust.
Sharing information has an indirect relation on the level of trust through information asymmetry. An example of this is the transparency between the general practitioner cooperation and the purchaser. The general practitioner group shares a lot of information with the purchaser, such as their financial reports. Due to this transparency, the purchaser has insights in how the group is investing the money of the purchaser. The purchaser can hereby for example see that money is not spent excessively on overhead such as buildings or lease cars. This all increases the level of trust by lowering down the information asymmetry.
Comparing these factors in the relationships of the purchasers there is a clear difference. The level of information sharing and level of trust is high at the general practitioner group and both factors are low at the hospital.
The relation between information asymmetry and trust
The last relation is between the level of information asymmetry and trust. In this relation information asymmetry influences the level of trust. A high level of information asymmetry at one party can result in suspicion. This is shown in the relationship between the purchaser and the hospital, because there is lack of information on the side of the purchaser about the reasons why treatments are done. This results in a low level of trust. “I am sure that when a hospital did not reach the agreed volume of a
specific bone test, then you know for sure they give each person above 80 years this tests, unless it is useful or not (procurement manager purchasing organization).” Purchasing organizations have no
information to confirm this statement, because the hospital will not share this information. The effect of this is information asymmetry and this example shows that this information asymmetry creates a low level of trust, with negative assumptions as a consequence.
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example, the hospital argues that the purchasing organization does not have enough knowledge and they are just acting in favor of their own interests. “I also think purchasers do not have enough
knowledge about medication and they just make the medication policy their own party (Pulmonary nurse specialist).”
These factors also show a direct link with the relationship of the purchasing organization, since the level of information asymmetry is low and level of trust is high with the general practitioner group. The opposite effect is seen in the relationship with the hospital, a high level of information asymmetry and a low level of trust.
Figure 2. Overview of the relations between the factors
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DISCUSSION
By studying the relationships between different providers and a purchaser of COPD, using agency theory, this study provides insights into two relationships using four factors. The study also provides insights in the relation between these factors. In this part the two relationships between the providers and purchaser and relationship between the factors is discussed.
The results showed two different relationships. The relationship between the general practitioner group and the purchasing organization is defined with a low level of conflicting goals and a low level of information asymmetry, with a high level of information sharing and a high level of trust. This displays a constructive relationship between a purchaser and a provider of care. The parties are collaborating in improving the quality and cost effectiveness of the delivered care. This relationship is contradictory with the statements of Van Raaij (2016) and the Raad voor Volksgezondheid en Samenleving (2017), who argued that the relationships are purely focused on costs and are a zero sum game. The relationship between the hospital and the purchaser can be seen as an opposite relationship. The level of conflicting goals is medium, information asymmetry high and the levels of trust and information sharing are low. The relationship between both organizations is in line with the statements of Van Raaij (2016) and the Raad voor Volksgezondheid en Samenleving (2017) concerning the focus on costs and conflicts and a zero-sum game.
The reason for these different relationships can be found in agency theory, because the two main concepts of agency theory, information asymmetry and conflicting goals, are opposite in both relations. But what is the explanation for these different levels? An explanation is found in the level of trust between the organizations, because also the level of trust is on an opposite level. The relation between the level of trust and agency theory is also confirmed in theory. The level of trust is compatible with agency theory, but also increases the level of the descriptive and explanatory power (Beccara, M., Gupta 1999). Also van Raaij (2016) stated that trust is important in the relationship between purchasers and providers and that both parties have a role in the creation or destruction of trust. In this study the role of trust is creates a better understanding of the relationships by providing a link between the agency topics about information and the agency topic of conflicting goals. Due to this linking role, the level of trust has in important role in the relationships between purchasers and providers.
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conflicting goals was low, but the involved managers stated the trust was the starting point and this resulted in an open and transparent relationship with high information sharing and low information asymmetry. In the relationship with the hospital the trust was low due to the conflicting goals, high information asymmetry and low information sharing. The starting point of the more positive relationship started with the inference of the third party, which resulted in more similarities between the parties. In this relationship not trust, but the decrease in conflicting goals was the opening of the more positive relationship. This shows the complexity of these two factors and due to this complexity both factors are in balance in this research.
The theoretical contribution of this research is showing the complexity of integrated care procurement. This complexity is shown by describing the influences of the three concepts from agency theory and the level of trust in the relationship between the purchaser and provider. These are complex relationships due to the fact that it is hard to define which factor is a starting point or which is more important.
CONCLUSION
This study investigated the procurement of integrated care using an agency perspective. This is done by a conducting a single case study in the procurement of COPD in market-based structure of health care procurement. In this case study the relationship between a purchasing organization and a general practitioner group is compared to the relationship between the same purchasing organization and a hospital. The relationship has been compared based on the following factors; information asymmetry, information sharing, conflicting goals and the level of trust.
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LIMITATIONS & FURTHER RESEARCH
This explorative study has some important limitations which need to be considered. First of all the gathered data and the variables in this research are measured in a qualitative manner, which makes it complex to examine the influence of variables on one another. Quantitative data is more appropriate to examine the influence of variables. Nevertheless, this research did show the influence of variables on each other, but it was not possible to look at definitive causation between these variables. The second limitation of this study is the data analysis; the transcribing, the coding and translations, were done by just one researcher. After this, also the same researcher analyzed these findings and searched for the patterns in the data. This was done as objectively and reliably as possible, but there is a chance of observer bias by the researcher. A third limitation is the choice of the procurement of one specific type of care and a lack of medical knowledge by the researcher to ensure the generality of this research. A different type of care can create other relationships between the variables.
Since this is an explorative study extra (quantitative) research is needed to validate the relations between the variables. Also, the influences of the relationship between different providers, such as secondary care and primary care, could be an interesting in the topic of integrated care procurement. This relationship was out of the scope of this research, but the role of agency theory and trust in this relationship can also create a better understanding of the complexity of the procurement of integrated care.
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APPENDIX A – CONSENT FORM
Researcher’s name: Bart Noort & Crijn Sijpkens Title: MSc & BSc Contact details of researcher:
Nettelbosje 2
9747 AE Groningen
050 363 8317 / 7020
a.c.noort@rug.nl / crijnsijpkens@gmail.com
Faculty/School/Department: University of Groningen, Faculty of Economics and Business,
Department of Operations
Title of Study: Multiple case study on healthcare purchasing in COPD & the influence of
information asymmetry
To be completed by: The interviewee Background of study:
This study aims to understand the role of healthcare purchasing organizations (e.g. health
insurers, governmental organizations) in improving task division and collaboration in chronic
care supply chains such as COPD. By conducting a multiple case study, we aim to understand how purchasers orchestrate care chains by using contractual and relational purchasing practices. Furthermore, we will investigate how financial incentives influence task division and collaboration. Finally, the role of information asymmetry in the relation between the purchasing organization and the provider will be investigated.
During this study, qualitative data will be gathered by conducting semi-structured interviews and collecting documentation. The study will be conducted in multiple countries.
Interviewees will be asked to participate in an interview which will take 1 – 1.5 hours. During the interview the participant will be asked questions about the organization of chronic care chains (particularly COPD), the role of the purchasing organization and the performance of the care chain. If agreed by the interviewee, the interview will be audio recorded. After the interview, the researcher will write a transcript which will be sent to the interviewee for possible revisions.
The transcripts of the interviews will be stored on the server of the University of Groningen. Data from the interviews will be anonymously published, in such way that the published information cannot be traced back to the interviewee.
Consent statement:
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I hereby certify that I have read and understood the above; that I am at least 18 years old; and that I voluntarily agree to participate in this research.
□ I agree □ I disagree
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APPENDIX B – INTERVIEW PROTOCOL A. Introduction
Introduction of the study (organisation of the COPD chains, the influence of health care procurement and financing, the influence of information asymmetry)
Introduction of the interviewee (function, background, role within in the COPD project, organisation etc.)
B. COPD chain general (1) & Noord Groningen region (2)
Could you describe how the diagnosis and treatment of COPD patients takes place, seen troughout the entire chain?
o Roles and responsibilities of the general practitioner, the medical specialist regarding the difference in the disease burden of the patients?
o The division of tasks diagnosis and treatment (why in this way?)
o Coordination, referral and communication about patients (why in this way?) o Knowledge exchange (new knowledge, casuistry) (why in this way?)
o The financing (production (FFS), performance (P4P), per capita, otherwise). What are the advantages and disadvantages?
Could you explain what has been done in recent years regarding COPD care in this region? And what was your role in this?
o Providing care in the right place (which care, which place) and if nog in the right place, what where the reasons?
o How do the outcomes of the care chain in your region relate to national and international figures?
o What can other regions learn from the approach and results in your region? o How are outcomes measured and monitored?
o Are reasoning / reports available?
C. Formation of agreements and negotiations
Could you describe how agreements are being made with healthcare providers and health purchasing companies?
o Which topics? Difference in interests between parties? o Problems / constraints (role of government and regulation)? o Long term versus short term (the coming year)
o What are the considerations within your organization regarding the agreeements? o Time indication (increase of decrease)?
o Goals of healthcare providers & purchasing companies
o Relationship between the two parties (constructive, differences in influence, dependent on each other, the influence of the government, regulations, market mechanisms)?
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What is the role of information in the formation of agreements between the purchasing companies and the health care providers within the COPD chain?
o What kind of information? (information may be specific medical knowledge, number of treatments, treatment costs, quality of treatment, possible innovations, etc.) o The importance of the information
Is the availability and quality of the information sufficient and adequate? Are you satisfied with the information used during negotiations?
o Is there any kind of information missing and, in case of, how is dealed with this situation?
o How is the quality of the information? (differences between care providers?) o How is the information obtained? (From which parties?)
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