Health Economics, Policy and Law (2007), 2: 391–407

ª Cambridge University Press 2007 doi:10.1017/S1744133107004264

The complexity of governance change: reforming

the governance of medical performance in
Germany
VIOLA BURAU*
Department of Political Science, University of Aarhus, Denmark

Abstract: The governance of medical performance is changing and new

governing instruments are emerging. Existing analyses highlight the complexity
of new governance arrangements, but the more or less dualistic perspective limits
the possibility for exploring more fully this complexity. The present article
therefore uses recent contributions to the literature on governance to explore the
co-existence of different forms of governance with the aim of assessing the
relative extent and the substantive nature of governance change. Using recent
reforms of the governance of medical performance in Germany as a case study,
the analysis suggests that the complexity of governance change takes three
forms: first, the balance among (hybrid) forms of governance is shifting; second,
the nature of individual (hybrid) forms of governance is changing; and, third,
both types of change are reflected in tensions not only between but also within
(hybrid) forms of governance. As such, the article also contributes to the
recent literature on governance by highlighting the centrality of tensions in
contemporary governance, which can also occur within both hybrid forms of
governance and ‘pure’ forms of governance.

The governance of medical performance is changing. Professional self-regulation

has traditionally been dominant. This means that the state has allowed doctors
considerable autonomy over their work and that in exchange doctors have been
expected to provide quality care and de-politicize the rationing of health care.
However, heightened cost concerns and the emergence of more assertive patients
among others have challenged this implicit contract between doctors and the state.
Instead, new governing instruments are emerging, which emphasize the importance
of public accountability. The present article critically assesses the extent and nature

*Correspondence to: Department of Political Science, University of Aarhus, Bartholins Allé, DK-8000
Aarhus C, Denmark. Email: viola@ps.au.dk
This article presents material gathered as part of an international research project on ‘Governing
doctors: A comparative analysis of pathways of change’ (2005–7). The project was funded by the
Danish Social Science Research Council. I am grateful to Ellen Kuhlmann and Claus Wendt for
comments on earlier drafts of the article and to Marie Rønde for assistance with the literature search.

391
392 VIOLA BURAU

of change in the governance of medical performance using recent health reforms in

Germany as a case study.
The literature assessing the impact of New Public Management reforms on
medical practice highlights the complexity of new governance arrangements,
especially the co-existence of professional self-regulation and new forms of
governance. For example, Allsop and Mulcahy (1996) in their analysis of new
public management reforms in Britain emphasize that internal, professional,
and external state-based forms of regulation tend to occur in combination.
Similarly, Dent (2004) in his comparative analysis of hospital reforms in Europe
presents a continuum of different degrees of professional and managerial con-
trol to characterize the ambivalent nature of change in individual countries.
The interplay between different forms of governance is even more explicit in
Harrison et al.’s (2002) study of the changing approaches to medical practice.
The authors characterize the new approach to medical practice as a hybrid of
‘scientific-bureaucratic medicine’. The analyses above have in common that
they tend to focus on professional self-regulation as interacting with another
form of governance. Allsop and Mulcahy for example contrast internal with
external regulation, while Dent distinguishes between professional and manage-
rial controls. This makes for a more or less dualistic perspective and limits the
possibility for exploring more fully the nature of complexity of governance
change.
Building on existing analyses, this article relates changes in the governance
of medical performance to broader changes in how states relate to societies
and govern public services. This allows putting the complexity of governance
centre stage. More specifically, exploring the co-existence of different forms
of governance provides a basis for a more precise assessment of the extent
and nature of governance change. To this end, the analysis presented in this
article uses recent contributions to the literature on governance, which chal-
lenge the view of a linear move away from hierarchy and towards other, net-
work-based forms of governance. Instead, Newman (2001) suggests that
change tends to be incomplete and that the relationship between old and new
forms of governing remains ambivalent. Newman therefore tries to capture
the non-linear nature of change by defining governance as the interplay between
different forms of governing (similarly Jørgensen and Vrangbæk, 2004).
Against this background, this article analyses more closely the complexity of
governance change through examining the co-existence of different forms of
governance. The aim is to assess both the relative extent and the substantive
nature of governance change. Using recent reforms of the governance of medical
performance in Germany as a case study, the analysis suggests that the complex-
ity of governance change takes three forms: first, the balance among (hybrid)
forms of governance is shifting; second, the nature of individual (hybrid) forms
of governance is changing; and, third, both types of change are reflected in
tensions not only between but also within (hybrid) forms of governance. As
 The complexity of governance change 393

Table 1. Different forms of the governance of medical performance

professional self-regulation network

based on expert authority
for example, codes of practice and clinical
guidelines set by professional bodies,
monitoring through peer review
towards professional control over practice
hierarchy
based on formal authority
for example, centralized system of standard
setting and auditing, earmarked funding,
professional regulation as part of
bureaucracy
towards control, standardization and
accountability
based on interdependent flows of power
for example, negotiations among purchaser,
provider and professional organizations of
quality standards/monitoring
towards adaptation and flexibility
market
based on managerial power
for example, performance-related payment,
competition for contracts, public ranking
based on benchmarking
towards maximizing cost efficiency and
effectiveness

such, the article also contributes to the recent literature on governance by high-
lighting the centrality of tensions in contemporary governance, which can also
occur within both hybrid forms of governance and ‘pure’ forms of governance.

The analysis
In terms of analysing the co-existence of different forms of governance Newman
(2001) and Jørgensen and Vrangbæk (2004) suggest distinguishing between
four ideal forms of governance: hierarchy, the rational goal/market model, the
open systems/network model, and the self-governance/clan model (based on
professional self-regulation). Table 1 illustrates what the individual forms of
governance mean in relation to the governance of medical performance and
points to the tensions between them.
Governance-based professional self-regulation pulls into the direction of
professional control over practice. Typical forms of governance are codes of
practice and clinical standards set by professional bodies and monitoring
through peer review. The authority of (medical) experts is the basis of power.
This stands in stark contrast with market-based forms of medical governance,
which rest on managerial power. Here, the focus of governance is on maximiz-
ing cost efficiency and effectiveness. Examples of this type of governance
include performance-related payments of providers (such as Diagnosis-Related
Groups), competition for service contracts in public quasi markets, and the pub-
lic ranking of provider organization based on benchmarking. As Newman
(2001) suggests, in reality market and hierarchy-based forms of governing are
often closely connected. Examples of this form of governance include a central-
ized system of standard setting and auditing, the use of earmarked funding and
embedding professional regulation in the regular public administration of
394 VIOLA BURAU

health care. This is markedly different in relation to network-based forms of

governance, which are rooted in flows of power among interdependent actors.
Examples include joint negotiations of quality standards and monitoring among
purchaser, provider, and professional organizations. This type of governance
pulls into the direction of adaptation and flexibility, in the context of ongoing
negotiations that include processes of feedback and learning.
Based on this the authors introduce different types of governance change.
Jørgensen and Vrangbæk (2004) define governance change as the changing
nature both of individual forms of governance and of the relationships between
different forms of governance. This builds on an understanding of individual
forms of governance as dynamic and non-exclusive. More specifically, the
authors identify: changes within individual forms of governance, changes in
the balance between different forms of governance, and the emergence of hybrid
forms of governance. In contrast, Newman treats individual forms of govern-
ance as static and exclusive. Individual forms of governance consist of a distinct
set of definitions of problems and assumptions about the nature of change.
When combined, as is typical of contemporary policies, this leads to tensions
that cannot be resolved easily. Governance is thus characterized by multiple
and conflicting forms of governance that pull into different directions. As
such, Newman (2001) goes beyond the description of hybrids as more or less
unproblematic combinations of different forms of governing and instead focuses
on the interactions and especially tensions between different forms of govern-
ance. Governance change therefore emerges as a process concerned with balan-
cing competing pressures and addressing a variety of dilemmas.
The following analysis uses the distinction between ideal typical forms of
governance as a framework for mapping out change in the governance of med-
ical performance and uses this as a basis to critically assess the extent and nat-
ure of governance change. More specifically, the analysis initially looked for
four types of governance change: change in the balance between different forms
of governance, change within individual forms of governance, change as
reflected in the emergence of hybrids, and change as reflected in tensions
between different forms of governance. In the course of the analysis, it emerged
that the third type of change was less relevant in the present case. Hybrids are a
salient feature of governing arrangements in Germany and recent reforms have
changed existing hybrids but not added new ones.
The present article analyses the extent and nature of governance change using
recent reforms of the governance of medical performance in Germany as a case
study. Freidson (1970) suggests that controlling clinical work is at the centre of
medical governance, as doctors as professionals are about applying knowledge.
Further, compared to education and research, performance is an area of govern-
ance which has the most direct effect on the public (as cases of medical negli-
gence demonstrate). This politicizes the governance of medical performance
and therefore makes performance an ideal focus for studying governance
 The complexity of governance change 395

change. The governance of medical performance consists of all those mechan-

isms that together influence the performance of medical work in terms of either
diagnosis or treatment broadly understood. Such mechanisms can take the form
of standard setting or monitoring and include knowledge-based mechanisms
such as research and clinical guidelines as well economic-based mechanisms
such as funding based on diagnosis-related groups. In terms of analysing the
extent and nature of governance change, the case of Germany is particularly
interesting. The salient mix of different forms of governance typical of the cor-
poratist health care state provides a good basis for analysing the co-existence of
different forms of governance in relation to both the extent and nature of
governance change. Further, in addition to professional self-regulation, doctors
are also involved in other, network- and hierarchy-based forms of govern-
ance (Kuhlmann, 2006). This potentially makes change difficult, and, as such,
Germany offers an ideal test case for critically assessing the relative extent of
governance change. Also since the late 1990s, there has been a plethora of
health reforms that have addressed the micro level of medical practice. The ana-
lysis presented below looks more closely at aspects of individual reforms, rely-
ing mainly on primary sources in the form of articles from policy and health
practitioner journals in addition to secondary sources. The following analysis
begins by examining the traditional (hybrid) forms of governing medical perfor-
mance and against this background maps out governance change following
recent reforms.

Traditional (hybrid) forms of governing medical performance

In Germany, professional self-regulation has traditionally dominated the gov-
ernance of medical performance, but has come to increasingly co-exist with a
hybrid of network- and hierarchy-based governance in form of the joint self-
administration of insurance funds and doctors (for an overview see Wigge,
2000).
As in other countries, statutory organizations of professional self-regulation
are responsible for setting professional and ethical standards. In Germany,
state-level Chambers of Doctors (Ärztekammern) set standards directly
through general codes of good practice and more indirectly through their
responsibility for secondary training and continuing education, as well as
through dealing with cases of malpractice. This is complemented by voluntary
medical guidelines developed by specialist societies as well as by more direct
approaches in form of professionally led quality management. In 1997, for
example, the Federal Chamber of Doctors (Bundesärztekammer) and the
Federal Association of Insurance Fund Doctors (Kassenärztliche Bundesverei-
nigung) issued ‘guidelines’ for clinical practice. In 1999, this culminated in
the creation (together with the insurance funds) of a clearing hob for clinical
396 VIOLA BURAU

guidelines as part of the Medical Centre for Quality (Ärztliches Zentrum für
Qualität in der Medizin), a non-statutory organization for medical quality
created by several organizations of doctors in the early 1990s (Clade, 1999;
Wigge, 2000).
In addition to professional self-regulation, there is another statutory
regime of governance. The joint self-administration of insurance funds and
doctors is at the heart of the corporatist health care state and represents a
hybrid of hierarchy and network-based forms of governance (for an over-
view see Busse and Riesberg, 2004; Deppe, 2000; Kuhlmann, 2006;
Rosenbrock and Gerlinger, 2004). This part of the governance regime in
effect consists of two parts: legislation regulating statutory health insurance
as ‘pure’ hierarchy-based forms of governance and the collective agreements
by joint self-administration and more specifically the Federal Committee of
Doctors and Insurance Funds (Bundesausschuss der Ärzte und Krankenkas-
sen). The committee includes the statutory Federal Association of Insurance
Fund Doctors and the federal associations of the different insurance funds.
The committee’s main responsibility is the specification and implementation
of federal framework legislation, and over the years the committee has
grown into a ‘small legislator’ in health policy. Taken together this means
two things. First, hierarchy-based forms of governance are limited and
consist of mainly procedural and some substantive legislation regulating
the statutory health insurance. As such and second, the negotiations of
insurance funds and doctors are statutory in nature and this explains their
hybrid nature, combining elements of network- and hierarchy-based forms
of governance.
In terms of substance, the governance of medical performance is mostly
indirect and takes the form of financial incentives. Since the early 1990s, the
funding of ambulatory care, pharmaceuticals, and hospitals has been based on
different forms of provider budgets or spending caps (for an overview see Busse
and Riesberg, 2004: 164). Financial incentives are especially powerful when
combined with definitions of the range of services covered, as in relation to
ambulatory care and pharmaceuticals, because this allows for the de facto
exclusion of services. Target volumes for pharmaceuticals also operate at the
level of the individual practice and as such extend possibilities of monitoring
medical performance. The same applies to ambulatory care, where assessment
is random or based on indicators of excess service provision, although the Orga-
nizations of Insurance Fund Doctors (Kassenärztliche Vereinigungen) remain
responsible for this type of monitoring (for further details see Rosenbrock and
Gerlinger, 2004: 130). Taken together this provides a potential springboard
for change and for formalizing and fine tuning the governance of medical per-
formance. Figure 1 maps out the traditional (hybrid) forms governing medical
performance.
 The complexity of governance change 397

Figure 1. Traditional (hybrid) forms of governing medical performance

professional self-regulation

chambers of doctors set standards

through codes of practice, education
and dealing with malpractice

medical societies set voluntary

clinical guidelines

doctor led centre acts as clearing hob

for clinical guidelines
network/hierarchy

joint self-administration of insurance funds

and doctors
• sets financial incentives in form of
provider budgets and spending caps
• in relation to new treatments in
ambulatory care and pharmaceuticals
defines service range and procedures for
monitoring

hierarchy

federal legislation defines mainly

procedural and some substantive
aspects of governance

Reforming the governance of medical performance

Health reforms since the late 1990s have changed the governance of medical
performance (for an overview see Igl, 2002; Hess, 2005; Sauerland, 2001): first,
in terms of the balance between different (hybrid) forms of governance the joint
self-administration has extended its scope and now even includes some aspects
of governing that used to be part of professional self-regulation; second, in
terms of the nature of individual (hybrid) forms of governance the joint-self
administration and hierarchy have become more formalized and fine tuned;
and, third, these changes have exacerbated the tensions both between different
and within individual (hybrid) forms of governance.

Changes in the balance between (hybrid) forms of governance

In terms of the balance between different (hybrid) forms of governance, there
are two types of changes: the joint self-administration has extended its scope,
first in its own right, and second by including some aspects of governing which
used to be part of professional self-regulation. At the same time and as exam-
ined in more detail in the discussion below of changes in individual (hybrid)
398 VIOLA BURAU

forms of governance, the relevant federal legislation now has more substantive
elements and this extends the scope of hierarchy to some extent.
First, indirect standard setting through defining the scope of the health insur-
ance and what services are included has provided a springboard for extending
the scope of the joint self-administration. The development of the Joint Com-
mittee of Insurance Funds and Providers (Gemeinsamer Bundesausschuss) has
been key here. More specifically, the scope of the assessment process for the
inclusion of services has been extended to include not only existing treatments
(and thereby also the exclusion of services) but also hospital treatment. The
Joint Committee is now also responsible for quality assurance, setting standards
and defining procedures for monitoring.
The scope of the assessment process for the inclusion of services has been
extended to include the services provided by hospitals. This points to the emer-
gence of a joint governing strategy across the ambulatory care and hospital care
sectors that is closely reflected in changes to the Joint Committee of Insurance
Funds and Providers. In the 1990s, the Joint Committee developed into the flag-
ship of a new governing strategy (Urban, 2001). In 1997, a sub-committee for
the evaluation of medical treatments and procedures was created; in 2000, a
sub-committee on hospital care followed; and, in 2004, all sub-committees
merged into a new Joint Committee (for an overview see Busse and Riesberg,
2004: 46). The legal and corresponding institutional integration of governing
arrangements has advanced further with the introduction of funding through
diagnosis-related groups.
Procedures of quality assurance are the other new area of the joint self-
administration (Schmacke, 2001). The extended responsibilities of the Joint
Committee include defining (evidence-based) guidelines for medical treatment
and closely related to this compulsory quality assurance (for an overview see
Sauerland, 2001). Following this, office-based doctors as well as hospitals are
required to set up measures of internal quality management and are also subject
to external quality assessment. For example, as part of their external quality
assurance hospitals have to document quality indicators, which form the basis
for comparisons across hospitals. Significantly, incomplete documentation trig-
gers negative sanctions in the form of more frequent, in this case yearly, assess-
ments of the correct use of DRGs. In terms of the governance of medical
performance, this makes for a more formalized approach to governing.
Second, in terms of extending the scope of the joint self-administration by
including some aspects of governing, which used to be part of the professional
self-regulation, the evaluation of medical guidelines is an indicative example.
As mentioned above, the Medical Centre for Quality as a non-statutory organi-
zation run jointly by several medical organizations initially occupied this niche.
The Modernization Act in 2004 made the evaluation of medical guidelines a
statutory responsibility and transferred this responsibility to the Joint Commit-
tee; the clearing hub of the Medical Centre for Quality ceased to exist in the
 The complexity of governance change 399

same year. The literature refers to such developments as ‘Korporatisierung’

(Döhler, 1995; Döhler and Manow, 1997), whereby the joint self-
administration extends its scope while at the same time becoming both more
standardized and centralized. However, here it also has to be taken into consid-
eration that the governance of medical performance is still new territory for
insurance funds and where doctors, also as part of the joint self-administration,
continue to exert considerable influence. For example, many of the staff of the
newly created Institute for Quality and Efficiency (Institut für Qualität und
Wirtschaftlichkeit) have a medical background and the approach of the Institute
to evaluation mirrors the focus and methods of medical research. Kuhlmann
(2006) suggests that this reflects the fact that global models of quality manage-
ment are not adequately linked to existing governing structures both within and
outside the medical profession.

Changes within individual (hybrid) forms of governing

In terms of changes of the nature of individual (hybrid) forms of governance,
the joint-self administration and hierarchy have become more fine tuned and
formalized. First, the joint self-administration uses a wider range of criteria
both for evaluating medical treatments and for defining clinical guidelines and
mechanisms for setting standards. Second, hierarchy has become more differen-
tiated in procedural as well as substantive terms.
First, the basis for evaluating medical treatments and procedure was
extended to include ‘benefit’ and ‘efficiency’ in addition to ‘medical necessity’,
making for a broader as well as more formal assessment process (Busse, 1999:
78). In addition, the assessment process is now closely tied to the notion of ‘evi-
dence-based medicine’ and, as discussed above, this has coincided with the
introduction of procedures of quality assurance. A newly created Institute for
Quality and Efficiency is meant to support the work of the Joint Committee
through, among other things, presenting evidence on the quality and efficiency
of medical services and evaluating selected evidence-based guidelines (see
Sozialgesetzbuch V, 2005: x139).
This process of mainstreaming relates the governance of medical perform-
ance to a broader ‘quality turn’. This adds new ways of setting standards for
treatment and diagnosis within the statutory health insurance, not least as the
‘quality turn’ has been part and parcel of wider organizational reforms
(Schmacke, 2002). For example, in 2000 the Joint Committee was extended
to include a sub-committee on co-ordination, charged with, among others,
defining treatment guidelines for inter-sectoral care. In conjunction with the
opening up of the collective contract and the development of new forms of con-
tracting, clinical guidelines also gain further ‘operational meaning’ for the gov-
ernance of medical performance, as the Disease Management Programmes
demonstrate (Müller de Cornejo, 2005). The Programmes, which focus on
400 VIOLA BURAU

specific sets of chronic illnesses, include process-related standards and also open
up the possibility of more extensive monitoring (Kuhlmann, 2004). The corres-
ponding requirements for quality assurance vary between individual pro-
grammes and include: standardized documentation, feedback reports to
doctors, and patient information (Busse and Riesberg, 2004: 66). Nevertheless,
clinical guidelines continue to remain largely advisory (as opposed to compul-
sory) and, as such, first and foremost provide a basis for the individual decisions
by doctors, as opposed to defining a corridor for individual decisions (Hart,
2000). This reflects a broad consensus among key actors in the health policy
arena, ranging from insurance funds (cf. Schönbach, 2001) and the Institute
for Quality and Efficiency (cf. Gesundheit und Gesellschaft, 2002) to the gov-
ernment (Bundesministerium für Gesundheit und Soziale Sicherung, 2004).
Second, the nature of hierarchy has become more fine tuned in procedural
but also substantive terms (cf. Rosenbrock and Gerlinger, 2004; Urban, 2001;
Wendt et al., 2005). The most obvious indication of this change is the fact
that the federal government now often sets deadlines by which the joint self-
administration has to come to an agreement (and threatening intervention in
the case of non-agreement). In relation to the introduction of diagnosis-related
groups as part of the Reform Act in 2000, the government defined a tight time
table, which the self-administration was unable to meet in full. In addition, the
government outlined a substantive framework for negotiation by the joint self-
administration, which was also subject to final approval by the Ministry of
Health (Busse, 2004). The threat of government intervention is a strong ‘sym-
bolic policy’, whereas its specific impact on governance arrangements is less
clear. In the case of Disease Management Programmes, for example, the dead-
line set by the government had the opposite effect and made for a strong alli-
ance between providers and insurance funds. This was precisely to avert
hierarchy-based governance in form of government intervention.

Tensions between and within (hybrid) forms of governance

The two sets of changes, in the balance between different (hybrid) forms of gov-
ernance and within individual (hybrid) forms of governance, are complex. At
the same time, these changes exacerbate the salient tensions between as well
as within (hybrid) forms of governance. Figure 2 below offers an overview.
First, there are tensions within the hierarchy and more specifically between
the possibilities and limits of hierarchy-based forms of governance. These forms
of governance have traditionally been weak and have focused on the procedural
aspects of setting the framework of the joint self-administration. Yet, over
recent years, this framework setting has become more specific in relation to pro-
cedural but also substantive issues. The government now combines delegation
with a considerable degree of ‘context steering’. The government is also quite
active as an ‘architect of political order’ (Döhler, 1995), creating institutional
 The complexity of governance change 401

Figure 2. Reforming (hybrid) forms of governing medical performance

spaces for intervention. As discussed above, examples from recent reforms

include the reform of the Joint Committee and the creation of the Institute for
Quality and Efficiency. At the same time, this fine tuning has exposed the limits
of hierarchy-based governance, as the capacity of the federal government con-
tinues to be limited in institutional terms. The government therefore does not
necessarily have the capacity to assert its role in relation to seeing reforms
through and the running of the newly created institutions. For example,
although Disease Management Programmes signal a willingness on the part of
the government to use more extensively hierarchy-based forms of governance,
traditional forms of governance in the form of the joint self-administration
remain strong and this also secures the continuously strong influence of doctors
(Kuhlmann, 2006).
402 VIOLA BURAU

Second, there are tensions between hierarchy-based forms of governance and

the joint self-administration. The joint self-administration has not only main-
tained its position at the centre of health governance, but, as discussed above,
has even widened its scope, especially as reflected in the considerably extended
role of the Joint Committee. Thereby, the joint self-administration has moved
into areas that were formally the exclusive responsibility of professional self-
regulation and has thereby also become more closely integrated into the agenda
of the government. The substance of the governance of medical performance
has become more controversial and the joint self-administration depends even
more strongly on legislation as a source for legitimacy. At the same time, it is
precisely the changed nature of hierarchy-based forms of governance, in the
form of more fine tuned procedural and substantive steering, that limits the
room for manoeuvre of the joint self-administration.
Further and third, there also exist tensions within the joint self-
administration. The provider organizations involved in the Joint Committee
gain influence, but their position vis-à-vis their membership becomes more
problematic. This particularly applies to the Federal Organization of Insur-
ance Fund Doctors with its compulsory membership. The more intense distribu-
tional struggles as a result of cost containment have heightened the divisions
among doctors. With its statutory status the Federal Organization is caught
up between having to make more compromises vis-à-vis insurance funds so as
to not lose ground, while at the same time having to implement those deci-
sions vis-à-vis their membership (for a more detailed analysis see Gerlinger
and Stegmüller, 1999; more generally Brechtel, 2001; Urban, 2001). In relation
to the last aspect it is also significant that the opening of the collective contract
has challenged the monopoly of the Associations of Insurance Fund Doctors
over ambulatory care and has allowed for grass root initiatives from individual
(groups of) doctors to gain influence (Döhler, 2002).
Finally and fourth, the less secure position of the Federal Organization of
Insurance Fund Doctors has repercussions for its relationship with the medical
organizations not involved in the joint self-administration and leads to tensions
between the two. The scientific and interest organizations for their part poten-
tially lose influence as the importance of purely voluntary forms of professional
self-regulation diminishes. The situation is similar in relation to the Federal
Chamber of Doctors, as the governance of medical performance by the joint
self-administration has become more extensive in scope and thereby co-exists
more firmly with the governance by (statutory) professional self-regulation.
The provider organizations have been proactive in terms of involving indivi-
duals in internal and external quality management, including the new agencies
responsible for quality assurance. Nevertheless, tensions between the two types
of medical organizations remain, and, for example, came to the fore as part of
the negotiations of the first Disease Management Programmes. The Federal
Chamber of Doctors in particular was strongly opposed to the Programmes,
 The complexity of governance change 403

because of the stronger formalization of clinical guidelines. In contrast, the

Federal Association treated the Programmes as an opportunity to secure the
continued influence of the joint self-administration. The tensions culminated
in the withdrawal of the Federal Chamber from the negotiations.

Discussion
The governance of medical performance is changing and, with the policy
emphasis on strengthening public accountability, new forms of governance are
emerging. The literature which assesses the impact of these reforms highlights
the complexity of new governing arrangements whereby professional self-
regulation co-exists with other forms of governance. This is an important
insight, but the focus of the analysis remains firmly on professional self-
regulation as interacting with other forms of governance. Such a more or less
dualistic perspective limits the possibilities for exploring the complexity of gov-
ernance arrangements and thereby for more fully understanding governance
change. Against this background, the present article puts the complexity of
governance centre stage by relating changes in the governance of medical per-
formance to broader changes in how states relate to societies and govern public
services. The article uses recent contributions to the literature on governance to
analyse more closely the co-existence of different forms of governance. More
specifically, the review of the literature introduces hierarchy, network, the mar-
ket, and professional self-regulation as four (ideal typical) forms of governance
and on that basis identifies different types of governance change. Using recent
health reforms in Germany as a case study the analysis presented here maps
out the co-existence of different forms of governance with the aim to assess
more precisely the extent and nature of change in medical governance. As
such, the analysis also puts some of the key propositions of the recent literature
on governance to the test.
The governance of medical performance in Germany has traditionally been
characterized by the co-existence of three (hybrid) forms of governance: profes-
sional self-regulation in the form of both statutory and voluntary profession-led
regulation of medical practice; joint self-administration as a hybrid of hierarchy
and network-based governance, which consists of statutory negotiations
between insurance funds and providers about different substantive aspects of
health insurance; and hierarchy in form of federal legislation setting the pro-
cedural and, to a lesser extent, the substantive framework of health insurance.
As discussed above, the co-existence of these (hybrid) forms of governance is
closely related to the nature of the corporatist health care state, where the state
tends to extensively delegate governing tasks to statutory, non-state bodies. This
makes for a high degree of institutional embeddedness and not surprisingly
recent health reforms do not change the basic composition of the governance
404 VIOLA BURAU

of medical performance. Instead, as Figure 2 above illustrates, the governance

of medical performance is undergoing complex change, notably in three ways:
first, the balance among (hybrid) forms of governance is shifting; and, second,
the nature of individual (hybrid) forms of governance is changing. Third, both
types of change are reflected in tensions not only between but also within
(hybrid) forms of governance.
First, the balance among (hybrid) forms of governance is shifting in favour of
the joint self-administration and, to a lesser extent, hierarchy. The scope of the
joint self-administration in relation to the governance of medical performance is
extending considerably and now also includes defining the service range for
existing and hospital treatments as well as defining quality assurance and being
responsible for the evaluation of clinical guidelines. At the same time, the rele-
vant federal legislation now has more substantive elements and this extends the
scope of the hierarchy to some extent. The scope of professional self-regulation
formally remains largely intact and only the evaluation of clinical guidelines
has moved to the joint self-administration. Yet the greater scope of joint self-
administration, in conjunction with the somewhat extended scope of hierar-
chy, clearly challenge the voluntary elements of professional self-regulation
and also provide a counterweight vis-à-vis the statutory elements of professional
self-regulation.
Second, the changes within (hybrid) forms of governance occur mainly in
relation to joint self-administration and hierarchy, where the mechanisms of
governance are becoming more fine tuned. When defining the service range of
different sectors of health care provision, the joint self-administration now
uses a broader range of criteria, which in addition to criteria of medical quality
also include criteria related to economic efficiency and medical evidence.
Further, the coupling of standard setting to the ‘quality turn’ has opened up
new possibilities beyond defining the range of services covered by health insur-
ance. In relation to hierarchy, the fine tuning of mechanisms of governance has
occurred especially in relation to the procedural aspects of the federal legisla-
tion and increasingly includes specific deadlines for the negotiations of the joint
self-administration together with threats of government intervention.
The discussion above suggests that change in the governance of medical per-
formance occurs first and foremost gradually, while the basic components of
governance remain intact. This includes professional self-regulation and as
such the analysis presented in this article supports existing studies of the impact
of New Public Management reforms on the governance of medical practice.
Similarly, the literature on governance stresses the non-linear nature of govern-
ance change, whereby old and new (hybrid) forms of governance exist side-by-
side. However, in contrast to capturing governance change using dualistic
notions of governance, the present analysis opens up for the complexity of gov-
ernance. Governance forms (and associated governance change) do not always
neatly fall into dualistic categories such as internal and external regulation as
 The complexity of governance change 405

the joint self-administration with its strong involvement of the medical pro-
fession illustrates. Similarly, a single point on a continuum (such as between
professional and managerial controls) or a single ideal type (such as scientific
bureaucratic medicine) do not always accurately capture the nature of govern-
ance change. In the case of Germany, for example, governance change occurs
in relation to three separate (hybrid) types of governance and the relations
among them.
Finally, the two forms of governance change discussed above exacerbate sali-
ent tensions. Importantly, tensions exist not only between different (hybrid)
forms of governance, but importantly also within (hybrid) forms of governance.
This in particular has interesting implications for recent contributions to the lit-
erature on governance. Jørgensen and Vrangbæk (2004) include hybrid forms of
governance in their discussion of governance change. This builds on the idea
that, while forms of governance are different, they do not necessarily exclude
each other. At first sight, the notion of hybrids stands in clear contrast with
Newman’s focus on tensions between different forms of governance as based
on distinct (and as such exclusive) logics of governing. However, the analysis
presented in this article suggests a more complex picture, notably in two
ways. First, tensions can also occur within hybrid forms of governance. The
joint self-administration is a genuine hybrid form of governance combining ele-
ments of network (in form of negotiations between insurance funds and provi-
ders) with elements of hierarchy (whereby the negotiations occur in a statutory
framework and function as ‘small legislation’). At the same time, the amalgama-
tion of two forms of governance into a hybrid is far from conflict free, as the
tensions within the joint self-administration and especially between the elite
and the grass roots of the associations of the insurance fund doctors demon-
strate. Second, tensions occur even within (pure) forms of governance. In the
case of Germany, for example, this includes tensions within hierarchy and
more specifically between the possibilities and limits of the federal legislation
in terms of its governing capacity. As such, the analysis presented in this article
highlights the centrality of tensions in contemporary governance and calls for a
more thorough understanding of such tensions.

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