INTER-ORGANIZATIONAL RELATIONS IN PUBLIC-PRIVATE PARTNERSHIPS: NATIONAL HEALTH INSURANCE IN INDIA MAURYA DAYASHANKAR RAMDHARI NATIONAL UNIVERSITY OF SINGAPORE 2015 ii INTER-ORGANIZATIONAL RELATIONS IN PUBLIC-PRIVATE PARTNERSHIPS: NATIONAL HEALTH INSURANCE IN INDIA MAURYA DAYASHANKAR RAMDHARI (MPP, National University of Singapore) (MBA, IIHMR University) A THESIS SUBMITTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY LEE KUAN YEW SCHOOL OF PUBLIC POLICY NATIONAL UNIVERSITY OF SINGAPORE 2015 iii iv Acknowledgement My doctoral journey in public policy owes much to a number of individuals who have provided me with the strength to survive the process. First of all I would like to express my gratitude to my thesis supervisor Prof. M Ramesh, who patiently guided me throughout this long journey. His feedback and insights were invaluable throughout the process of researching and writing the thesis, and I feel privileged to be his student. Prof. Ramesh guided my exploration in the field of health policy, and enriched my understanding with a much broader range of knowledge in Social Policy as well as Public Policy. His constructive feedback and patience throughout the process were critical to my survival in this endeavor. I am also very fortunate for having had an excellent thesis advisory committee, consisting of eminent scholar in Public Finance, Prof. Mukul Asher; and one of the sharpest policy experts I have ever known, Prof. Wu Xun. Prof Asher guided me throughout my PhD journey and has been a constant source of inspiration and support during difficult times. Prof Xun provided very insightful comments on a number of drafts, and his advice on the penultimate draft led to important improvements in the thesis. Apart from the thesis committee, I have also benefitted from discussions with several professors – Prof. N. Chindarkar, Prof O. Poocharoen, Prof. M. Howlett, and Prof E. Araral. I take this opportunity to thank all my teachers, from whom I had the privilege of learning: Prof. M. Howlett, for helping me understand the nuances of the field of Public Policy; Prof. E. Araral & Prof. R. Lejano for helping me easily grasp the key ideas in Institutional Analysis and Game Theory; Prof. C. Brassard and Prof. D. Jarvis for helping me understand Research Methodology; and Prof. D. J. Thampapillai for helping me understand the basics of economic analysis. I am also thankful to Prof. K. H. Phua for helping me understand the link between public health v and public policy, and increasing my interest in the topic of this dissertation (Public- Private Partnerships). Apart from my teachers, discussions with several colleagues at school also helped me extensively, most importantly those with Ishani Mukherjee, Azad Bali, Iftikar, and Seck Tan. In addition, I express my gratitude to the support and guidance of Allen Lai, Krishnan, Alex Jinghavi Schuyler, Hoa, Shabanam, and Ching. This thesis would not have been completed if I had not received the support of several individuals during data collection and analysis. I am especially thankful to Mr. Anil Swarup, for providing me with access to data, and for his invaluable guidance on the scheme. I am also thankful to the core team members of the RSBY scheme, namely Dr. Nishant Jain, Ms. Henna Dhawan, Dr. Madan Gopal, and Mr. Tripathi. A number of colleagues working in the health sector in India provided important insights into the health insurance sector and the workings of the RSBY scheme, especially Gaurav Tripathi, Jagannath Mishra, Vijendra Katre, Abhishek Singh, Onkar Shukla, Garvit Jain, and Ali Zaidi. I am also thankful to the alumni and faculty members of IIHMR Jaipur, in particular Prof. Barun Kanjilal. I also express my gratitude to Chang Yee for helping me edit this thesis in such a short time. Finally, this acknowledgement would be incomplete if I did not express my gratitude to my family and friends in India and Singapore, specially Amit Verma, Preeti Prakash, Sanjay, Deepak Jagtap. First, I would like to thank Krishna and his devotees in India and Singapore who provided me spiritual strength to continue through this doctoral journey. I would also like to thank Bimal and Varsha, who provided me with rock-like support during the entire journey, including providing a place to write my thesis. Most importantly, without the support of my family members – parents, bothers, and in-laws – I would have not been able to finish this thesis. Lastly, I owe a special debt of gratitude to my wife and children for their support throughout the entire process. vi TABLE OF CONTENTS SUMMARY ix LIST OF TABLES xii LIST OF FIGURES xiv LIST OF APPENDICES xv 1 CHAPTER ONE: INTRODUCTION AND STRUCTURE OF THESIS 2 1.1 The Puzzle: Motivation for This Thesis 3 1.2 Research Questions and Objectives 8 1.3 Significance of the Questions 11 1.4 Structure of Thesis 15 1.5 Concluding Remarks 16 2 CHAPTER TWO: INTER-ORGANIZATIONAL RELATIONS (IOR) PERSPECTIVE IN POLICY IMPLEMENTATION PERFORMANCE: THEORETICAL BACKGROUND 18 2.1 Policy Implementation Performance 19 2.1.1 Policy Implementation Performance in PPP Context 20 2.2 Determinants of Implementation Performance 21 2.3 Role of IOR in Policy Implementation: Drawing from the IOR Literature 23 2.4 Unpacking Inter-Organizational Relations 25 2.5 Dynamics of IOR in Implementation Performance 31 2.5.1 Opportunism in Public Contracting Context: Implementation Structure as a Driver of Opportunism 31 2.5.2 Matching Compliance Mechanisms to Implementation Structures in the Context of Opportunism: Theoretical Review 34 2.5.3 Matching Compliance Mechanisms to Implementation Structure in the Context of Opportunism: An Empirical Review 38 2.6 Impact of Congruent IOR on Performance 43 2.6.1 Measuring Congruent IOR 44 2.6.1.3 Contract Governance 46 2.6.2 Linking IOR with Implementation Performance 55 3 CHAPTER THREE: CASE BACKGROUND 60 3.1 Background: The Healthcare System in India 60 3.2 Background: National Health Insurance Scheme 64 3.3 Performance of the Scheme 69 3.3.1 Implementation Performance in RSBY 70 3.4 Role of IORs: Explaining Variation in Implementation Performance 74 4 CHAPTER FOUR: RESEARCH DESIGN AND METHODOLOGY 90 4.1 Research Design 90 vii 4.1.1 Understanding the Implementation Dynamics of the Scheme 91 4.2 Understanding IOR Dynamics in Controlling Opportunism 93 4.2.1 Case Selection 93 4.2.2 Data collection 96 4.2.3 Data Organization Framework: Critical Incident Technique 98 4.2.4 Data Interpretation Approaches 99 4.3 Measuring IOR 103 4.3.1 Mapping Collaboration Process in the RSBY scheme 104 4.3.2 Data Collection 106 4.3.3 Survey Instrument 107 4.3.4 Survey Process 108 4.3.5 Creation of a Collaboration Index: Confirmatory Factor Analysis 109 4.3.6 Limitation of Methodology: Overcoming the Disadvantages of an Arithmetic Mean 111 4.4 Assessing the Impact of IOR on Implementation Performance 112 4.5 Research Credibility: Reliability and Validity 117 5 CHAPTER FIVE: DYNAMICS OF IOR GOVERNANCE IN THE CONTEXT OF OPPORTUNISM 121 5.1 Case Studies 123 5.1.1 Uttar Pradesh 124 5.1.2 Punjab 141 5.1.3 Himachal Pradesh 155 5.2 Cross–Case Analysis 166 5.2.1 Variation in Opportunism and Opportunism Management 166 5.2.2 Management of Opportunism 167 5.3 Discussion: Answering the Research Questions 179 5.3.1 What Factors Drive Choice of Governance Tool? 179 5.3.2 Mixing of Governance Approach 184 5.3.3 How Parties Combine Governance Tools to Control Opportunism 185 5.3.4 How Governance Mechanisms Interact in the Context of Opportunism 188 5.3.5 Link between Inter-Organizational Governance and Opportunism 196 5.3.6 Variation in Governance Dynamics : Network Level Analysis 201 5.3.7 Variation in Governance Dynamics: State Level Analysis 202 5.4 Summary, Conclusion and Emerging Themes 205 6 CHAPTER SIX: COLLABORATIVE GOVERNANCE & NETWORK LEVEL PERFORMANCE 214 6.1 Descriptive Analysis of the Survey Data. 215 6.1.1 Description of Program Performance of Sample 216 6.1.2 Description of Respondents and their Organizations 219 6.2 Measuring Collaboration in case of RSBY scheme. 221 6.2.1 Refined Measure of Collaboration 221 6.3 Assessing Impact of Collaboration on Implementation Performance 225 6.3.1 Collaboration and Enrolment Performance 225 viii 6.4 Collaboration and Hospitalization Performance 242 6.4.1 Empirical Specification and Descriptive Statistics 245 6.5 Results: Quality Aspect of Network Performance 255 6.5.1 Empirical Specification 256 6.6 Discussion and Conclusion 257 7 CHAPTER SEVEN: CONCLUSION AND POLICY IMPLICATIONS 263 7.1 Summary of Main Findings: 263 7.2 Integration of Findings 265 7.2.1 Factors Driving Opportunistic Behavior During Implementation : Issues in Implementation Context 265 7.2.2 Implementation Management Approach Used in the Scheme 267 7.2.3 Influence of Compliance Mechanism on Policy Implementation Performance 269 7.3 Thesis of congruency 273 7.4 Theoretical Implications 275 7.4.1 Implications for Theoretical Development in Policy Implementation 275 7.4.2 Implications for the Field of Inter-Organizational Relations 277 7.4.3 Implication for Theory of Collaborative Governance 278 7.4.4 Implications for Contract Governance Theory 279 7.4.5 Implications for Thesis of Governance Design and Governance Failure 280 7.5 Policy Implications 282 7.5.1 Policy Implications for Practitioners 282 7.5.2 Policy Implications for RSBY Scheme 285 7.6 Contributions 286 7.7 Limitations 290 7.8 Further Research 291 8 BIBLIOGRAPHY 294 ix SUMMARY The objective of this dissertation is to understand the functioning of nationwide low-income health insurance scheme - Rashtriya Swasthya Bima Yojana (RSBY) - in India and explain variations in its performance across states. It demonstrates that inter-organizational relations (IOR) play a critical role in shaping the variations in performance of the scheme across jurisdictions. The performance of the RSBY scheme, a public–private partnerships, varies widely across jurisdictions, despite similar incentive structure, contract design, administrative structure and management capacity. The theories traditionally used to explain variation in performance of a public-private partnership Contract Theory, Relational Theory, Social Capital Theory, theories in policy Implementation, Network Analysis/ Management fail to explain the variation in performance. Existing theories have not elucidated the role inter-organizational relations play in determining performance. The inter-organizational relations consist of two parts –the way relationship between agencies is structured also known as implementation structure and the approach used to manage the relationship, also known as compliance mechanism. Implementation structure and compliance mechanism together constitute inter-organizational relations among organizations. Most of the existing theories and frameworks have either examined role of implementation structure or role of compliance mechanisms in determining performance. Some theoretical frameworks have considered both- implementation structure and compliance mechanism,-but they treat them as single variable without considering relationship between them. There is very little conceptualization on how the congruence or incongruence between implementation structure and compliance mechanism affects performance and the extent to which it has impact on performance. This dissertation suggests that relationship between structure and compliance mechanism is a significant determinant of implementation and explains x variations in performance across jurisdictions. Congruence between structure and compliance mechanism leads to appropriate inter-organizational relations conducive to implementation performance. To assess the role of inter-organizational relations on implementation performance, the dissertation conducts two sequential inquiries using two different methods. First, it qualitatively traces the influence of inter-organizational relations on implementation performance by mapping variations in congruence between implementation structure and compliance mechanism during different stages of policy implementation and traces their effect on performance. This also illuminates the process of evolution of inter-organizational relations; trace their effectiveness in managing opportunities and threats that arise during implementation and thus assessing the appropriateness of inter-organizational relations in managing implementation process. Second, after understanding the effect of inter-organizational relations on implementation performance, the study assess the impact of inter-organizational relations on implementation performance. To achieve this, first a measure inter- organizational relations in the context of the case used in this thesis is created. After measuring inter-organizational relations, its impact on performance is assessed in the second step. For creating a measure of inter-organizational relations, a review of the existing approaches to measuring inter-organizational relationships is done and inter-organizational relations in the context of case is measured using primary survey. In the second step, the study assess the extent to which inter-organizational relationship among agencies explain variation in implementation performance across jurisdictions using regression analysis. Thus the first study traces the effect of inter-organizational relation on implementation performance, and the second assesses the extent to which inter- organizational relations impact implementation performance. Facts and findings from [...]... inter- organizational relationships (IORs) in public- private partnerships in healthcare and works within the realm of policy implementation studies, the research questions guiding the thesis are as follows: Research Question: What is the role of inter- organizational relationships in determining the performance of the scheme? Here, inter- organizational relationship‘ refers to the structure, management and steering of relationships... of inter- organizational relations in the prevention and management of opportunism, measuring inter- organizational relations among agencies, and linking inter- organizational relations to performance Chapter Three provides the background of Rashtriya Swasthya Bima Yojana (RSBY) and the context of the case – the evolution of policy on public- private partnerships in healthcare in India Chapter Four presents... Urban Health Mission and now National Health Mission- by increasing funding and improve management strategies, are trying to revive dysfunctional public health system 2 The healthcare reform program, the National Health Insurance Scheme (Rashtriya Swasthya Bima Yojana, or RSBY), launched in 2007, is one of the largest and most prominent government-sponsored social health insurance schemes, covering 37... two inquiries open the black-box of inter- organizational relations during policy implementation and explain their effect on policy performance, generating implications for both theory and practice in policy implementation Findings from the study confirm that inter- organizational relations are an important determinant of variation in implementation performance Policy implementation by default is an inter- organizational. .. in social services, policy implementation, and interorganizational relations has identified implementation management and the resulting relationship between implementing agencies15 as an important determinant of the performance but there is limited research on the role of scheme implementation or contract management in determining performance in public contracting and public private partnerships In. .. developing-country context The findings of this study will probably address one of the pressing questions in the field of public administration for the developing-country context: is collaboration work in the context of a developing country like India? Collaboration requires a new set of skills which the managers in the public system in India are not expected to have, and thus it is expected that public. .. families in 436 districts across 29 states by 2013 This program is implemented through a public- private partnership (PPP) mode, in which a state government agency contracts with an insurance company to provide defined health insurance coverage to a defined population in a district The government funds the insurance premium, provides oversight of the program, and facilitates implementation Health insurance. .. multi-case, multilevel analysis, which is discussed For the second objective – linking interorganizational relations with performance – a quantitative approach used to link interorganizational relations with performance is discussed Chapter Five presents an analysis of the first objective – tracing the influence of inter- organizational relations on implementation performance The chapter traces 15 the evolution... concludes by integrating the findings and observations generated on inter- organizational relationships, and summarizing how they influence implementation performance 1.5 Concluding Remarks The information and arguments presented in this chapter clearly suggest that the variation in performance in the case of RSBY cannot be explained by commonly used theoretical approaches The compliance mechanism used in the... Development Report 2010) In India, if the healthcare reforms of the last decade (2005–2014) are ignored, the public sector can be viewed as failing to provide even basic healthcare services Institutional failures and low public health spending had led to a gradual deterioration of the public health system over the years, and by the end of the century, public facilities were in a pathetic state, healthcare providers . INTER-ORGANIZATIONAL RELATIONS IN PUBLIC-PRIVATE PARTNERSHIPS: NATIONAL HEALTH INSURANCE IN INDIA MAURYA DAYASHANKAR RAMDHARI NATIONAL UNIVERSITY OF SINGAPORE. ii INTER-ORGANIZATIONAL RELATIONS IN PUBLIC-PRIVATE PARTNERSHIPS: NATIONAL HEALTH INSURANCE IN INDIA MAURYA DAYASHANKAR RAMDHARI (MPP, National University of Singapore). For creating a measure of inter-organizational relations, a review of the existing approaches to measuring inter-organizational relationships is done and inter-organizational relations in the