The soft budget constraint syndrome in the hospital sector

János Kornai

Society and Economy, 2009, vol. 31, issue 1, 5-31

Abstract: Research to date has focused mainly on the soft budget constraint syndrome in the corporate sector and in the credit system. This article concentrates on the hospital sector. It describes the motivations and the contradictory nature of the behaviour of the patient, the physician, the hospital director, the politician and the hospital owner. The motivations explain the reasons behind the strong inclination to overspend and the tendency of softening budgetary limits. The burden of overspending and debt is pushed upward at each level of the decision-making and financing processes. This article covers the relationship between the various ownership types (state, non-profit and for-profit non-state ownership types) and the soft budget constraint syndrome. Finally, it looks at the phenomenon from normative aspects: the favourable and unfavourable consequences of the hardening of the budgetary limit and how normative dilemmas are reflected in the minds of the participants of the events.

Keywords: Hungary; soft budget constraint; hospitals (search for similar items in EconPapers)
JEL-codes: G28 G33 H77 (search for similar items in EconPapers)
Date: 2009
Note: I cooperated closely with Csaba Dózsa in the collection and processing of the Hungarian data used in the study. His expertise and knowledge helped me a great deal in understanding the problems of the Hungarian situation. The Hungarian data were collected under his direction with the involvement of Nikoletta Malbaski. I am grateful for their thorough and careful work and substantial proposals. I have also received notable advice from professor Karen Eggleston, one of my former students and co-authors. I also thank Zsuzsa Dániel, Péter Forgács, Gyula Kincses, Mária Lipták, Melinda Makár and Péter Mihalicza for their valuable support. Eszter Nagy also provided untiring help to me in the collection of literature and editing of the study, just as she did in my previous works.
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Related works:
Journal Article: The soft budget constraint syndrome in the hospital sector (2009)
Working Paper: The soft budget constraint syndrome in the hospital sector (2008)
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