A New Institutional Economics Perspective on the Relationship Among Societal Values, Governance Structure and Access to Rural Health Care Services

Abstract

According to New Institutional Economics, transactional activities, governance structures, institutions and beliefs and values are related hierarchically. Williamson (2000) formalizes this framework to show that each governing level must be aligned with the adjacent level for transaction costs to be minimized. This framework is applied to the question of balancing costs and access in health care. Transaction costs in providing health care services can be minimized if all hierarchical functions are aligned. Examining the highest level associated with beliefs and values reveals that the beliefs of people might not be fully consistent with the institutions and governance structures expected or advocated in the area of health care, particularly in the context of rural health care services.