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SUB NATIONAL GOVERNANCE BETWEEN NETWORKS AND HIERARCHY – COMPARING THE LOCAL
CO-ORDINATION OF HEALTH SERVICES IN BRITAIN AND GERMANY
Viola Burau*
FIRST DRAFT Comments welcome.
Please do not quote without permission. Paper to be presented at the workshop on ’Policy Networks in Sub National Governance: Understanding Power Relations’ at the ECPR Joint Sessions, 13-18 April 2004, Uppsala * Department of Political Science, University of Aarhus, Bartholins Allé, DK-8000 Aarhus C,
Denmark Tel +45 89 42 54 32, fax +45 86 13 98 39, email [email protected]
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Introduction
The ‘governance school’ (Börzel 1998) describes policy networks as a third ‘logic of co-
ordination’, which is distinct from both markets and hierarchies (cf. Kooiman 1993 & 2000 & 2003,
Kickert 1993 & 1995, Rhodes 1996 & 1997, Mayntz 1993a & 1993b, Mayntz and Scharpf 1995a &
1995b). Governance through networks relies on interdependent relations among autonomous actors,
who, on the basis of shared interests, exchange resources to achieve a common goal. Horizontal co-
ordination among actors is the key characteristic of network-based governance and points to a
considerable capacity of actors for self-organisation. Not surprisingly, network-based governance
emerges as a form of co-ordination, which is outside hierarchical control. Here, Rhodes’ (1996,
1997, 2000) influential characterisation of policy networks as ‘self-organizing’ and as ‘governing
without government’ is indicative.
However, recent empirical studies suggest that network-based governing is closely intertwined
with vertical power relations and steering opportunities of the state. This echoes Pierre and Peters’
(2000, also Peters 2000) critique of society-centred notions of governance and their plea for a more
state-centric understanding of governance. On the basis of their study of old age care policies in
Sweden Johnansson and Borrel (1998), for example, suggest that central government has a variety
of control and steering mechanisms at its disposal. Government control has not disappeared but
taken on different forms. Similarly, Bache’s (2000) study of urban generation in the UK highlights
that government itself can be a pivotal actor in policy networks. In their study of urban partnerships
in the UK Lowndes and Skelcher (1998) go even further and suggest that different forms of
governance prevail at different points of the life cycle of inter-organisational networks.
The paper contributes to this strand of the literature by critically examining the dynamics of
network-based governance through a comparative analysis of the local co-ordination of health
services in Britain and Germany. This is a particularly powerful test case, as the local-co-ordination
of health services lends itself to network-based co-ordination, yet is embedded in multi-level
governance structures, which also differ significantly between the two countries. The analysis
addresses two questions. First, to what extent is the local co-ordination of health services
characterised by network-based governance? Second, in what ways do vertical relations impact on
the (horizontal) co-ordination among local actors? This is closely related to the more general
question as to how best to achieve co-ordination among (local) actors. The analysis looks at the
local co-ordination of health services as a policy outcome and uses evaluation reports, government
documents together with existing studies to assess the relative importance of network-based
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governance and the opportunities of the centre to steer. The cross-country comparison indicates that
the local co-ordination of health services has some characteristics of network-based governance, but
often depends on steering from the centre. In conceptual terms, this suggests that the analysis needs
to look more closely at the context of inter-organisational relations, at both horizontal and vertical
levels.
Network-based governance and hierarchies
At a basic level, network-based governance can be defined as a form of informal co-ordination,
which involves relations among autonomous yet interdependent actors, who co-ordinate their
interests through the exchange of resources (cf. Börzel 1998, Marin and Mayntz 1991). The
autonomy of actors makes for co-ordination that is primarily non-hierarchical and takes place at
horizontal level, not least because no single actor has sufficient capacity to make policy on its own
(cf. Kenis and Schneider 1991, Kickert 1995). Instead, the network perspective focuses on the
processes and structures of inter-organisational relationships.
In the literature on network-based governance vertical co-ordination and especially the state
tends to be downplayed and remains ambivalent at best. In part, this reflects the genesis of the
notion of network-based governance, which is closely tied to the debate about the failure of
hierarchies as instruments of government (cf. Mayntz 1993a). The crises of public finances and the
welfare state, in particular questioned the effectiveness of instruments, which conceive of governing
as a top-down, one-way process (cf. Pierre and Peters 2000, Flynn 2000). In terms of problem
diagnosis the literature points to the fact that as power becomes increasingly dispersed in highly
functionally differentiated, hierarchical governance looses its steering capacity, while networks of
organised actors offer a new source for governing. (cf. Kenis and Schneider 1991, Mayntz 1993a,
Rhodes 1997). Network-based governance responds to this heightened complexity by combining
elements of both market and hierarchy and as such making for a distinct mode of governing:
network-based governance brings together a broad range of actors (as in markets), who work to
pursue a common goal (as in hierarchies). Seen in this way, network-based governance combines
the capacity of actors to act responsibly (that is collectively) without being forced (Mayntz 1993b).
The nature of network-based governance as a more strongly society-based form of co-ordination is
particularly explicit in the work of Kooiman (1993, 2000, 2003) and his concept of governing as
‘social-political governance’. As such, the governing capacity of networks explicitly emerges from
beyond central authority.
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Here, Rhodes’ work is indicative (1996, 1997, 2000). His starting-point is the observation that
the state has been hollowed out from below and above as well as from within and that British
politics has gradually moved from the centralised ‘Westminster’ model to a ‘differentiated polity’
model; many centres of government link many levels of government. This reflects both the limits of
central steering and the fact that there are many policy areas and issues government cannot steer.
Instead, the aggregation of interests through networks is a functional necessity in a polity, which
lacks a clear centre. By way of a base line, Rhodes therefore characterises network-based
governance as ‘governing without the state’; policy networks are self-governing and resistant to
central direction and as such enjoy considerable autonomy from the state. However, he
acknowledges that relations between government and networks are asymmetric, but insists that
centralisation co-exists interdependence and introduces the notion of ‘asymmetric interdependence’
(1997:15). One way in which this tension manifests itself is the fact that in the differentiated polity
the state has more control over less; the decentralisation of service delivery co-exists with
centralisation of financial control (Rhodes 1996: 662). Rhodes (1997: 53) also notes that it is the
state, which enables networks and sets the parameters for network actors, although steering is bound
to remain indirect and imperfect.
A similar ambivalence underlines Kickert’s (1995) notion of ‘steering at a distance’, whereby
the state as co-ordinator governs through influencing networks. One the one hand, the concept
points to the existence of a non-hierarchical form of steering. Yet on the other hand, Kickert
emphasises that steering by incentives is almost equivalent to non-steering, reflecting the self-
organising capacity of networks (Kickert 1993). As Hogget (1996) argues the focus on the dispersal
of power means that the concept of ‘steering at a distance’ has difficulties seeing regulation and
autonomy together, being less sensitive to new forms of power.
In contrast, in his recent work Kooiman (2000, 2003) addresses the relationship between
horizontal and vertical forms of co-ordination more explicitly. He argues that what he calls ‘social-
political governance’ consists of different modes of governing including: self-governance, co-
government and hierarchical governance. Kooiman suggest that over recent decades governing has
shifted to the first two modes of governance, although hierarchical forms of co-ordination still play
an important role. Significantly, however, vertical forms of co-ordination have been transformed
(from command to regulation, and from procuring to enabling) and the relationship with network-
based governance is one of residual and quite separate co-existence.
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The local co-ordination of health services – Britain and Germany compared
The (local) co-ordination of health services is a salient policy issues, reflecting traditional divisions
between different sectors of health care delivery, especially between ambulatory and hospital
services as well as between medical and non-medical care services. At the same time, the (local) co-
ordination of health services has become a buzz word in current health policy debates, as it
promises both higher quality and higher cost efficiency (cf. Burau 2004, Kühn 2001, Kümpers et al.
2002, Peckham and Exworthy 2003, Verdi/PLS Rambøll without year). The increasing
specialisation of health services, together with the growing number of patients with multiple
illnesses (especially older people) has highlighted the quality aspect of service co-ordination. This
coincides with a greater interest in quality management in health policy more generally (cf. Blank
and Burau 2004) and here, service co-ordination is associated with such notions as ‘integrated’ and
‘seamless’ care. The focus on cost containment for its part has highlighted the efficiency aspect of
service co-ordination. The underlying argument is that the growing specialisation of health services
leads to ‘parallel’ service provision (and potential oversupply), not least because chains of service
delivery become longer and more complicated. Here, health service co-ordination offers the
possibility of shifting tasks to their ‘appropriate’ place and freeing funds for additional services.
The co-ordination of health services can occur at different levels, although service co-
ordination at the local level is of particular relevance; it is here, that problems relating to the
interfaces between different services occur (cf. Badura et al. 2000). Problems of co-ordination are
also likely to be locally specific to some extent, reflecting the specific needs of local populations
and the specific features of local service infrastructures. The local level of co-ordination has also
come into focus as part of a strong trend towards decentralisation underpinning health reforms
across Europe over the last two decades, which have been concerned with the fine-tuning of the
planning and delivery mechanisms (cf. Freeman 2000). The debate about the ‘regionalisation’ of
health services in Germany is even directly related to issues about strengthening the (local) co-
ordination of health services (Kühn 2001).
The local co-ordination of health services has many meanings, but broadly describes the co-
ordination of services as well as the collaboration among provider organisations across different
sectors (cf. Glendinning 2002, Kühn 2001). The local co-ordination of health services can take a
variety of forms reflecting different extents of co-ordination among local actors and here Hudson et
al. (1998 as quoted in Peckham and Exworthy, 2003: 181) distinguish between the following:
‘situation and encounter’, where interactions between organisations are infrequent, with
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organisational goals and interests remaining divergent; ‘communication’, where separate
organisations engage in some formal/informal joint working; ‘collaboration’, where joint working is
a central aspect of the mainstream activities of organisations; and, finally, ‘integration’, where the
boundaries between organisations become blurred. The following analysis uses these types of
service co-ordination to map out the extent of the local co-ordination of health services in Britain
and Germany over the last decade.
Britain: pushing the boundaries of health care1
In Britain, debates about the local co-ordination of health services have often focused on the divide
between health and social care services, which has come to be described as a ‘Berlin Wall’ (cf.
Means et al. 2003). Attempts to co-ordinate services across the health and social care divide have
had a long history and have tended to concerned with either the strategic co-ordination at the level
of organisations (such as joint planning) or operational co-ordination at practitioner level (Rummery
and Coleman 2003). The divide between the two services became even more visible following the
introduction of the purchaser-provider in the early 1990s and its emphasis on provider competition.
split, but also more difficult to address (cf. Kümpers et al. 2003, Mur-Veeman et al. 2003). Against
this background and the perceived failure of earlier initiatives, the 1990 Community Care Act
aimed to redefine the health and social care divide with social services acting as the lead agency and
health authorities having more narrowly defined responsibilities (Means et al. 2003). Organisational
goals and interests remained divergent, tough, typical of the ‘situation and encounter’ type of
service co-ordination.
In practice, the local co-ordination of health and social care services has tended to be strongest
in relation to community nursing and social services and has hardly involved general (medical)
practitioners (GPs) working in ambulatory settings (Glendinning et al. 2001). However, this
changed with the increasing primary care orientation of the British National Health Service (NHS),
which has been strengthened by the parallel but related trend towards a more decentralised
organisation of health services (Moon and North 2000). In the context of local health services, GPs
have traditionally played a key role as gatekeepers to hospital and other specialist services, and the
process of transferral can be seen as a forerunner of service co-ordination. But GPs have
1 Devolution has become a distinct feature of health policy in the Britain over recent years and the following analysis focuses on developments in England. However, as the main focus is on the cross-country comparison with Germany, the text will primarily use the term ‘Britain’ and only refer to ‘England’ organisational features specific to this part of Britain are concerned.
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traditionally been quite separate organisationally pointing to their marginal position in a health
service dominated by hospitals.
The situation has been changing following the introduction of the purchaser-provider split and
GPs have gradually become the centre of the local health service. This process has helped both to
extend and define more clearly the local co-ordination of health services. Building on their role as
gatekeepers many GPs in England opted to become ‘fundholders’ and to purchase an increasingly
wider range of hospital and other specialist services for their patients. Health service co-ordination
only became an explicit aim of the fundholding scheme in 1996, when ‘partnerships’ emerged as
central theme for health care delivery, marking a turn away from the competitive orientation of the
purchaser-provider split (Peckham and Exworthy, 2003: 187). Nevertheless, service co-ordination
was in some ways implicit in the process of contracting. Contracting requires the definition not only
of services, but also the division of labour between different services, and as providers fundholding
GPs also have a strong interest in pushing the second aspect.
In this way, contracting made for more intense contact between different providers, loosened
some of the boundaries between services (what Peckham and Exworthy refer to as the ‘unfreezing
of entrenched organisational positions’ (2003: 151)) and as such paved the way for more extensive
service co-ordination of the ‘communication’ type. Here, it was crucial that the contractual space of
GPs (initially as fundholders and later as part of so-called ‘multi-funds’) gradually expanded, to
include an increasingly greater share of the budget, community nursing services and finally all
elective surgery and outpatient services (Moon and North 2000). In the mid-1990s this culminated
in so-called ‘total purchasing’ initiatives, where consortia of GPs were responsible for the entire
range of services for the patients on their list. It is also indicative that these developments gradually
transformed ‘ambulatory’ into more broadly defined ‘primary care’ services, while at the same time
allowing for a more strongly locally-oriented health service.
In terms of the local co-ordination of health service, the introduction of primary care groups
(and trusts from 2000) in England in the late 1990s under the new Labour government was
significant in two respects: the trusts have much extended purchasing and planning responsibilities
in relation to health services, and they are also responsible for integrating health and social care
services. This also means that the two streams of co-ordinating local health services have been
brought together. In contrast to the fundholding schemes membership in the new primary care trusts
is compulsory and the new provider organisations are also responsible for a greater number of
patients. In formal terms, service co-ordination thus increasingly resembles the ‘communication’
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and in some respects even the ‘collaboration’ type of co-ordination. The trusts provide community
nursing and in addition to primary medical services, and commission the entire range of health
services for the population of their locality. Significantly, the trusts are also responsible for the
development of primary and community care services in their area, and for improving the health of
the local population. This responsibility for public health is likely to provide a catalyst for further
service co-ordination and notably with a broader range of local actors, including: local authority
departments other than social services, voluntary agencies as well private organisations. Against
this background, Peckham and Exworthy (2003: 18) suggest that primary care trusts are at the
vanguard of local co-ordination, significantly through both intra and inter-organisational structures
and processes.
In addition, the introduction of primary care trusts co-exists with a range of additional
mechanisms to promote co-ordination among different provider organisations, including: health
improvement programmes, local strategic partnerships, health action zones, and the possibility of
pooling budgets of health and social care services (Hudson and Henwood 2002). The 2000 NHS
Plans is also significant here, as it pushes, at least at the formal level, local service co-ordination
further towards ‘collaboration’ and even ‘integration’. This is reflected in the introduction of a ‘duty
of co-ordination’ and the introduction of the new care trusts, that is joint provider organisations for
health and social care, which also include more specific organisational set-ups, such as rapid
response teams and integrated home care teams (Hudson and Henwood 2002).
Germany: isolated and loose local co-ordination of health services
In comparison, the local co-ordination of health services in Germany is both more isolated and
more loosely defined. Office-based doctors, who compromise both generalists and specialists,
hospitals and nurses working in care and people’s homes all provide health services at local level.
However, neither collectively as a group nor as individual local actors do they have any
responsibility beyond the local provision of their own specific service. At the same time, the
responsibilities of local authorities in health care are defined only vaguely and following the
introduction of the long-term care insurance in the mid 1990s local authorities also lost the
responsibility for ensuring the adequate provision for long-term care (Geiser 1995). Any local co-
ordination of health services therefore emerges in a more ad hoc and informal way, relating to
specific local service issues and focusing on establishing the ‘situation and encounter’ type of
service co-ordination.
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As in Britain, the problem of the local co-ordination of health services has been highlighted by
the needs of older people, which cut across the divides among different services. In the case of
Germany, this is the divide between acute health care and long-term (nursing) care, which has
become even more apparent with the introduction of a separate insurance for long-term care in the
mid-1990s. The legislation itself in effect defines long-term care as a joint responsibility: the
insurance funds have to work together with other actors (§8 SGB XI), in order secure the provision
of long-term care services (Sicherstellungsauftrag). To this end insurance funds have the possibility
of setting up working groups at local and regional level (§12 SGB XI), further details of which are
regulated by state legislation. Here, the state of Northrhine-Westfalia has the most extensive
legislation (Oldemeyer without year) and it is the responsibility of the local authorities to set up so-
called ‘long-term care conferences’ (Pflegekonferenzen) at local level. The care conferences include
mainly different providers, third party payers and users, but also other actors as and when needed.
The care conferences are forums for exchanging views and identifying problems and as such a
platform for agreements over issues of service co-ordination. Here, strengthening interactions
among organisations is key (typical of the ‘situation and encounter’ type of service co-ordination),
whereas the ‘communication’ type of co-ordination is a more remote goal.
The thrust of the locally-based advisory or clearing centres for long-term care, which have
emerged in many states, is similar, although the focus on service co-ordination is less explicit (for
an overview see Igl et al. 1995). In the case Baden-Wüttemberg, for example, the principal focus of
the local advisory centres is to facilitate the access of patients to suitable care provision, through
providing information about local providers and also advise on a case-by-case basis (Wendt 1995).
This includes the co-ordination of services (for example in relation to weekend coverage), although
not always across different sectors. However, the regular contact among providers in relation to
individual cases may offer a basis for developing more structured inter-organisational co-ordination
(Moscher 1995).
In some states, the long-term care conferences have inspired similar conferences in relation to
health care. A prominent example is again the state of Northrhine-Westfalia, where local and state
level ‘health care conferences’ (Gesundheitskonferenzen) have been established as an instrument of
public health policies (and are embedded in the relevant state legislation on public health). The
conferences take the form of round tables and thematic working groups, and are supported by an
office to facilitate a continuous and stable process of exchange (and co-ordination) among local
actors. The aim of the conferences is to discuss problems relating to health services at local level
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and to formulate recommendations for action (Landesinstitut für den öffentlichen Gesundheitsdienst
without year). The recommendations are not legally binding and as such the conferences very much
depend on the (voluntary) commitment and compliance of local actors (Knesebeck et al. 2002).
Consequently, the joint nature of the process (of discussing problems, identifying possible solutions
and formulating recommendations) becomes an important condition for the relative success of
conferences as co-ordinating mechanisms. Significantly, an evaluation of a three year pilot project
indicates that the conferences are most successful where the local co-ordination of services is the
explicit aim and where services are concerned, which are at the margins of the responsibilities of
the self-administration, such as health promotion and mental health (Badura et al. 2000).
The local co-ordination of ambulatory and hospital care more specifically, has also been
supported by the fact that the boundaries between the two sectors have become weaker over recent
years. For example, hospitals are now allowed to provide pre admission diagnostic procedures, post
discharge treatment as well as one-day surgery (Wasem 1997). Building on this, some local service
co-ordination occurs around specific diseases reflecting the growing importance of fees based on
diagnosis-related groups (Verdi/PLS Rambøll without year). Other instances of local service co-
ordination centre around consortia of office-based doctors, which sometimes also include hospitals.
The consortia can have a variety of aims, from avoiding hospital stays by co-ordinating the work of
different specialists working in ambulatory settings to ensuring the seamless care of patients once
they are in hospitals by setting up an ambulatory care out-of-hours service (for an overview see
Verdi/PLS Rambøll without year). Legislative changes in 2000 further support the development of
such consortia, as it is now possible to complete contracts, which are separate from the normal (that
is collective) contract (Rosenbrock and Gerlinger 2004). This is significant as service co-ordination
becomes a more explicit focus of inter organisational relations, which also become more formal
(and as such pushing towards the ‘communication’ type of service co-ordination). Nevertheless,
compared to England, the scale of such collaborative pilots remains small: the report by Verdi/PLS
Rambøll (without year) estimates that there exist about 3000 consortia and that in 2002 only 26 of
these were based on a specific contract.
Horizontal relations in the local co-ordination of health services
As illustrated by the comparative analysis of Britain and Germany, any local co-ordination of health
services is a complex task, and involves a wide range of actors (reflecting the complexity of modern
health care) drawn from across the public-private private (reflecting the increasing welfare-mix in
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many health systems). By definition, the local co-ordination of health services is also locally
specific. As such, the local co-ordination of health services is likely to lend itself to informal, non-
hierarchical forms of governing in form of network-based governance (cf. Hudson and Henwood
2002, Rummery and Coleman 2003). This would suggest that the greater extent of local co-
ordination of health services in Britain reflects particularly strong horizontal co-ordination among
local actors, whereas network-based governing is weaker in Germany. However, the situation is far
from clear cut.
In Britain, the local co-ordination of health services has become increasingly formalised and
characterised by clear asymmetries of power. Service co-ordination occurs in different situations: as
part of the formal duty of providers to work in partnerships; as part of the formal responsibilities of
primary care trusts to improve the health of their populations; and as part of mergers of provider
organisations (as in the case of community care and in future social care). As such, service co-
ordination is based on a clear sense organisationally embedded obligation, with primary care trusts
being in the driving seat. Here it is also significant, that the extent of co-ordination increased (from
‘situation and encounter’ towards ‘communication’, some ‘collaboration’ and even ‘integration’) as
the hierarchical elements became stronger.
In Germany, by contrast, the local co-ordination of health services, as and when it exists, tends
to be informal and underpinned by the autonomy of local actors; none of the local actors can force
the other to join any efforts of service co-ordination. Service co-ordination occurs as part of local
‘conferences’ or within service consortia, bringing together local actors to identify problems and
possibly work towards common solutions. The underlying expectation is that the joint nature of this
process makes for joint working in practice and as such the conferences and consortia in effect only
act a springboard for service co-ordination.
In sum, the comparison of Britain and Germany seems to suggest that there is more local co-
ordination where there is more hierarchy and formalisation, and less local co-ordination where there
is more autonomy and more informality. How can this be explained? Further, what does this say
about network-based governance? In the following, I argue that the comparison of Britain and
Germany points to the context of inter-organisational relations and more specifically to the specific
factors enabling or/and prohibiting co-ordination among local actors. Significantly, such factors
exist not only in relation to horizontal relations, but also vertical relations.
The literature suggests that shared interests together with resource dependencies among actors
are the central building blocks for the formation of inter-organisational relations and as such an
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important condition for the emergence (and existence) of network-based governance. However, the
comparative analysis of the local co-ordination of health services in Britain and Germany indicates
that shared interests and resource dependencies among local actors are not always strong enough to
provide a firm basis for co-ordination among actors. The interests of local actors in health service
co-ordination are often diffuse and existing resource dependencies are clouded over by
organisational and professional divisions.
Diffused interests
The interests of local actors in the (local) co-ordination of health services fall into two categories.
The first, normative set of interests in service co-ordination relates to ‘higher quality health
services’, and is shared widely among local actors reflecting the positive connotations of ‘quality’
as well as overlaps with professional service ethics (cf. Hudson 2002b, Rummery and Coleman
2003). Yet, higher quality services do not necessarily yield any specific benefits for individual local
actors, and local actors are unlikely to be motivated to co-ordinate services by the promise of higher
quality alone as the salience of the debate about the local co-ordination of health services
demonstrates. It is also indicative, for example, that in Britain it is with the advent of the primary
care trusts that there is a local actor whose normative interest in service co-ordination is
underpinned by formal responsibilities, which in turn are firmly integrated into the quality
management structure of the health service as a whole.
The second, pragmatic set of interests in service co-ordination relates to the possibility of cost
savings through avoiding overlaps among different services. In comparison to higher quality
services this has a more direct appeal to local actors, especially under circumstances of tight
financial resources. In this case, service co-ordination is no longer the primary aim of local actors,
but a means to achieve something else, and if funding is highly constrained, strengthening the local
co-ordination of health services is in danger of focusing primarily on ‘getting rid of tasks’ rather
than co-ordinating services as such (Rummery and Coleman 2002). In the context of Britain this is
illustrated by the now classical debate as to whether a bath is a health or a social care activity,
reflecting the economic pressures the purchaser-provider split put on providers of social and
community health care (Hudson and Henwood 2002).
Tight financial constraints also sharpen the sensitivity of local actors for any additional costs
associated with service co-ordination. In their evaluation of local health care conferences in
Germany Badura et al. (2000), for example, found that following the introduction of budgets in
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ambulatory care office-based doctors were more interested in experimenting with new ways of
delivering medical care than to invest in resources in cross-sector initiatives. Similarly, in
discussions about local health service co-ordination some hospitals showed considerable reluctance
reflecting economic pressures to reduce the number of beds and the threat of hospital closure. As
such, cost savings through greater service co-ordination can also be an explicit threat to local actors,
as they may loose funding as well as organisational territory. The last aspect is exacerbated by fact
that the provision of health services relies to a great extent on the work of professionals such as
doctors and nurses, who define their identity through boundaries and for whom service co-
ordination therefore easily becomes a threat. In his study of working relations among GPs,
community nurses and social workers in Britain Hudson (2002b), for example, found that such
professionally-rooted obstacles persisted despite the widespread insight into the benefits of service
co-ordination.
Clouded over resource dependencies
As discussed above the local co-ordination of health services requires, by definition, the exchange
of resources among local actors as modern health care is highly specialised. Individual local actors
cover different yet complimentary parts of the local division of health care and as such strong
resource dependencies exist among the local actors (cf. Hudson and Henwood 2002, Rummery and
Coleman 2003). Services by GPs and Social Service Departments in the UK and home care
providers and to some extent office-based doctors in Germany are a particularly interesting resource
for exchange, as health policy over recent years has emphasised the importance of ‘basic’ over more
specialised health care services (cf. Burau 1999). In the case of medical services, this applies
specifically to GPs, as they have a strong gate-keeping position referring patients to both specialist
and hospital services, and less to office-based doctors in Germany, who include both generalists and
specialists. The services offered by Social Service Departments and long-term care providers is an
even more attractive resource for exchange, since services are more low-tech and inexpensive
reflecting their Cindarella status in relation to medical and especially hospital services.
However, existing resource dependencies are often clouded over by the distinctive
organisational and professional orientations of different services, which as legacies continue to
shape the co-ordination among local actors (Glendinning et al. 2001, Mur-Veeman et al. 2003). As
mentioned above, in the context of the UK the divide between health and social care services has
been a salient issue (cf. Hudson 2002a, Hudson and Henwood 2002, Means et al. 2003).
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Traditionally, health services have been organised hierarchically around medical expertise in form
of a National Health Service and have been at the centre of modern welfare states. As such, health
services are provided on the basis of need and are funded through general taxation. In contrast,
social care services have traditionally been organised by local authorities and focus on people’s
social problems in situations when all other forms of support have failed. This has put social
services at the margins of the welfare state and significantly services are needs-tested and are also
funded by co-payments.
The clouding over of resource dependencies is more pronounced in Germany. This reflects a
health service, which is divided into several distinct sectors, based on a plurality of funding sources
(Rosenbrock and Gerlinger 2004, Sachverständigenrat 2003). At a basic level, any service co-
ordination is made difficult by the fact that the different insurance funds use different definitions of
illness: the long-term insurance defines illness as chronic, the health insurance as acute and
therefore treatable, whereas the old age pension insurance focuses on rehabilitation. There are
additional fractions at service level, such as between services provided by office-based doctors and
nurses working in care homes/people’s homes. The two groups have traditionally been
characterised by highly gendered (that is unequal) working relations, which are now cross cut by
two separate insurance schemes, both of which are also under pressure to contain contribution rates.
Over recent years, both insurance schemes have tried to tighten up their commitment to long-term
care services leading, often sidelining issues of service co-ordination (cf. Bundesministerium für
Gesundheit und Soziale Sicherung 2001).
Vertical relations and the local co-ordination of health services
The analysis of horizontal relations in Britain and Germany demonstrates that there are limits to
network-based governing, reflecting the fact that the interests of local actors in health service co-
ordination are often diffuse and that resource dependencies among local actors are clouded over by
the existence of divisions in terms of organisational and professional orientations. However, the
comparative analysis also indicates that the formalisation of inter-organisational relations in Britain
seems to have strengthened health service co-ordination. This challenges the view in the literature
on network-based governance that co-ordination among actors occurs ‘naturally’ and instead points
to the importance of vertical relations of governing. This raises a number of questions: What are the
vertical relations in which the local co-ordination of health services in the two countries is
embedded? In what ways do vertical relations impact on the local co-ordination of health services?
14
Britain: structuring and steering from close-up
In England, a small set of actors spread over two levels makes up the vertical relations in which the
local co-ordination of health services is embedded (Department of Health 2004). At the top is the
Department of Health, which decides on the overall direction of health services, sets standards and
secures resources. Below are strategic health authorities, which are responsible for co-ordinating
local service planning and holding local providers to account. Here, the key mechanisms are the
strategic development of health services at local level and performance management.
Vertical relations are highly concentrated and integrated not only because of the small set of
actors, but also because the different levels are connected by strong hierarchical relations. The
strategic health authorities are creatures of statute and are directly accountable to the Department of
Health and as such enjoy only limited autonomy. This also points to the concentration of extensive
governing resources at the centre (cf. Blank and Burau 2004). The Department of Health has
considerable control over finances and also heads the ‘administration’ of the health service. This
reflects the fact that the health service is mainly funded out of general taxation as well as the
predominantly public nature of service provision. The health service is also embedded in a centralist
political system, which make for a high degree of institutional integration and the Department heads
the ‘administration’ of the health service. Strong institutional integration and the concentration of
governing powers mean that there are considerable resources for steering the co-ordination health
services at local level, especially of the hierarchical nature (Kümpers et al. 2002, Mur-Veeman et al.
2003). Since the late 1980s steering from the centre has moved towards increasingly closer steering
in form of mandating service co-ordination and crucially has also involved the restructuring of
inter-organisational relations itself (Hudson 2002, Hudson and Henwood 2002).
The introduction of the fundholding scheme meant that GPs became more strongly integrated
into the mainstream organisation of the NHS, making GP services more receptive to future reforms.
The contractual relations also helped to blur the boundaries between different services to some
extent and GP services came to be defined as primary care rather than medical care services. As
such, central government acted as an ‘architect of political order’ (Döhler 1995) and restructured
the inter-organisational relations at local level itself by repositioning GPs. However, it was left to
local actors to make use the newly created spaces for service co-ordination.
This changed when the government become more explicitly interested in the local co-
ordination of health services as part of its focus on ‘joined up’ governing, which consists of both
joined-up government at the centre and joined up governance (for example through public sector
15
partnerships) at the local level (cf. Newman 2001). The new primary care trusts have explicit and
now also mandatory responsibilities in relation to the co-ordination of health services. Relations
among local actors have become more formalised as a result, not least as relations are more strongly
integrated into policies of outcome management. The 2000 NHS Plan, for example, includes
performance measure for local partnerships, such as to reduce the number of delayed discharges
from hospitals. The restructuring of inter-organisational relations at local level has also become
bolder and has taken the form of structural integration, whereby community nursing services and
eventually also social services become subsumed under (primary) care trusts.
However, there are limits to this highly hierarchical approach to steering the local co-
ordination of health services. Although (primary) care trusts are about local service co-ordination,
they have to work in a prescribed organisational framework and towards specified goals in some
cases. In relation to care trusts, for example, central guidelines specify the terms, speed and
parameters of their creation (Hudson and Henwood 2002). In the face of the continuous flow of
changes it is also difficult to sustain existing or emerging inter-organisational relations at local
level. Rumery and Coleman (2003) therefore suggest that structural integration and force are not
sufficient to make the local co-ordination of health services happen. Hudson (2002a) goes even
further arguing that the imposition of structural change even undermines inter organisational co-
ordination by limiting the autonomy of local actors. This echoes Peckham and Exworthy’s (1999 as
quoted in Peckham and Exworthy, 2003: 193) findings that commitment and trusts are key
conditions for joint working.
Germany: stimulating at a distance
In Germany, by contrast, vertical relations consist of a wide range of different actors, which are
spread not only over several levels but also sector-specific arenas of governing (cf. Burau 1997,
2001). Here, the federal Ministry of Health is responsible for setting the framework of health care
services, whereas the specification and implementation of policies is in the hands of the joint self-
administration of insurance funds and providers, that is office-based doctors and hospitals. Federal
actors also share governing responsibility with the state level. Federalism together with self-
administration makes for fragmented and decentralised vertical relations and the centre has fewer
resources for steering the local co-ordination of health services. Steering therefore is more indirect
and takes the form of ‘stimulation at a distance’, leaving it to the self-administration and local
16
actors to react to these stimuli (for similar observations in relation to the Netherlands see Mur-
Veeman et al. 1999).
Significantly, the self-administration exists only at federal and state level, but not at local level
and changes over recent years have led to a further centralisation of governing at federal level (cf.
Burau 1997). This means that the local level enjoys very limited legitimacy in procedural terms.
The Basic Law also does not explicitly define the role of local authorities in health care, the only
exception being public health. Beyond that local authorities are allowed to regulate all issues
affecting their communities, but without interfering with the responsibilities of other actors in health
care (Badura et al. 2000).
A typical example of steering by ‘stimulating at a distance’ is the long-term care insurance. As
discussed earlier, the initial legislation itself stipulated the setting-up of cross-sectoral working
groups, but left the formulation of specific guidelines to the state governments. As a result, the
existence and form of such local working groups varies considerably across states (Oldemeier
without year). In a similar vein, the federal government initiated a series of pilot projects on
developing the provision of long-term care, a key aspect of which was to strengthen the regional co-
ordination across different providers and third party payers (Bundesministerium für Gesundheit und
soziale Sicherung 2001). In relation to both measures it is significant, that they only provide a
framework for (non-public) actors at lower levels to take the initiative and work towards the
strengthening service co-ordination, which above all is informal in nature.
However, as an evaluation of local health conferences in Northrhine-Westfalia shows, this
strategy is clearly limited in scope (Badura et al 2000). The local co-ordination focuses on ‘niche
services’, which are at the margins of the responsibilities of the health and long-term care insurance.
In contrast, it is next to impossible to change the structure of the local provision of health services
itself, as this tends to affect the responsibilities non-local actors. This also reflects the fact that
health governance is strongly legalistic in nature and as such rather inflexible.
In this respect, more recent federal initiatives indicate a slight change in strategy and focus on
more formal forms of service co-ordination (Rosenbrock and Gerlinger 2004, Verdi/PLS Rambøll
without year). The 1997 health reform included the possibility of pilot projects and so-called
‘structural contracts’, which are broadly aimed at increasing the cost efficiency and quality of health
services, but not specifically with service co-ordination itself. The importance of the two measures
lies in the fact that they create formal, contractual spaces for the insurance funds to (locally)
experiment with new forms of providing and funding services. Opening-up the legalistic framework
17
is important, as the structure of collective contracts has proved to be very inflexible. Building on
this, the 2000 health reform included provisions for a new type of contract, which explicitly aims to
develop a more co-ordinated service provision. The direct contracts between insurance funds and
providers may involve the transfer of budgets to provider organisations and some financial
incentives, putting activities concerned with service co-ordination on a more formal footing.
Nevertheless, the local co-ordination of health services remaims voluntary and loosely coupled. The
same applies to the measures of the 2004 health reform (Bundesministerium für Gesundheit und
Soziale Sicherung 2004), which offer insurance funds the possibility of establishing health centres,
allowing for the closer co-ordination of medical and non-medical services, and to contract hospitals
to offer care for certain diagnoses in ambulatory settings.
In this vacuum between ‘stimulation’ from the federal government and more or less informal
service co-ordination at local level states assume a potentially important intermediary role as the
example of Northrhine-Westafalia illustrates. The state has been something of a pioneer in
stimulating the (local) co-ordination of health services. In 1995 the state government initiated an
extensive pilot project on the ‘local co-ordination of health service’ (Ortsnahe Koordinierung der
Gesundheitsversorgung) (Badura et al. 2000). Even before the completion of the pilot project new
legislation on public health established local (together with state) health care conferences as a
regular component of state level (public) health policy. The state has also played a pioneering role
in putting long-term conferences on a firm legal footing (Oldemeier without year).
Sub national governance between networks and hierarchies
The literature suggests that network-based governance offers a particularly effective way of co-
ordination among organisational actors, as it combines elements of markets (involving a wide range
of actors) and hierarchies (pursuing a common goal). As such, network-based governance is
particularly well suited for complex issues, also referred as ‘wicked’ or ‘cross-cutting’ issues, which
require a ‘holistic approach’ combining re-integration and continued differentiation (Kümpers et al.
2002). The local co-ordination of such an issue: the complexity of health care means that service
co-ordination involves a wide range of actors, many of which enjoy considerable autonomy as
professionals; and the co-ordination of health services also has a strong horizontal component
reflecting its local specificity. This suggests that network-based governance is likely to facilitate the
local co-ordination of health services.
18
Table 1 The local co-ordination of health services in Britain and Germany
LOCAL CO-ORDINATION OF HEALTH SERVICES
MODES OF GOVERNING
high
low
horizontal relations
network-based
hierarchy-based
Britain primary care trusts
care trusts
Germany long-term/health care
conferences practice consortia
vertical relations
network-based
hierarchy-based
Britain close-up steering
structuring
Germany stimulating at a distance
However, the comparative analysis of Britain and Germany (summarised in Table 1 above)
presents a more ambivalent picture. The local co-ordination of health services seems to be stronger
where horizontal relations (among local actors) are based more on hierarchy than on networks, and
weaker where horizontal relations are based more on networks than on hierarchy. This points to a
19
number of factors, within horizontal but also vertical relations, inhibiting or/and promoting co-
ordination among organisations.
In the context of horizontal relations pragmatic but ultimately unstable interests in service co-
ordination often prevail over normative interests, making for rather diffused interests of local actors
in the co-ordination of health services. Similarly, existing resource dependencies among local actors
are often ‘clouded over’ by organisational and especially professional divisions. It is against this
background that the importance of vertical relations and steering from the centre becomes apparent.
The (increasingly) hierarchical approach taken by the central government in Britain helps to
counterbalance the inhibiting factors that exist at the horizontal (local) level by restructuring inter-
organisational relations (and especially repositioning individual actors) and backing up service co-
ordination by formal obligation. In contrast, the approach taken by the federal and state
governments in Germany is more hands-off and consists of ‘stimulation at a distance’. This
approach consists of creating communicative and increasingly contractual spaces, which local
actors can decide to use to work towards the strengthening of the local co-ordination of health
services. However, as the example of Germany demonstrates this approach often seems to less
successful at counterbalancing the inhibiting factors that exist at the horizontal level.
What are the implications for understanding governance at sub national levels? The
comparative perspective in particular highlights in the importance of the context of inter-
organisational relations at sub national levels. Looking at such contexts helps to identify the specific
factors promoting or/and inhibiting co-ordination among organisational actors, and to move beyond
the notion that co-ordination occurs naturally through sharing interests and exchanging resources.
Crucially, the analysis of the contexts of inter-organisational relations also broadens the perspective
to include vertical in addition to horizontal relations.
Further, the analysis of the local co-ordination of health services in the two countries
demonstrates not only that governments can still steer (cf. Johansson and Borrel 1998), but also that
the co-ordination among organisational actors explicitly requires some steering from the centre.
This can take a variety of forms, from steering up close and restructuring to stimulation at a
distance, and different types of steering make for different types of inter organisational relations at
local level. However, the analysis also indicates that more tightly focused inter-organisational
relations (reflecting more hierarchical steering) seem to be better positioned to co-ordinate health
services at the local level, although there are limits to this. In its very strong version hierarchical
steering is in danger of in effect weakening inter organisational relations, as recent developments in
20
Britain illustrate. In sum, co-ordination among organisational actors at sub national level emerges as
a combination of both network and hierarchy-based elements of governing and, as Newman (2001)
argues, governance emerges from the dynamics between different, seemingly conflicting modes of
governing.
21
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