Dispersed, competitive production by small producing units works well wherever markets
are a satisfactory way to organize output. It is less successful in health, for all the
reasons that markets work more poorly for health care. However, attempts to offset market
failings by integrating such dispersed activities into a hierarchical bureaucratic structure
have almost always run into problems of staff motivation and accountability. Close supervision
is difficult to implement, while excessive control is detrimental. A more successful
approach has been to establish a contractual relationship that relies on professional reputation,
and a strong sense of commitment and responsibility. Such contractual relationships
have a long history of success in countries such as Denmark and Norway, and have
recently been tried successfully in Croatia, the Czech Republic, and Hungary.