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Hospital Healthcare Europe

Realistic entrepreneurialism in healthcare

David Chinitz
1 July, 2006  

David Chinitz
Senior Lecturer
Department of Health Management and Policy
Braun School of Public Health
Hebrew University-Hadassah
Jerusalem, Israel

Immediate Past Chair
Scientific Advisory Committee
European Health Management Association (EHMA)

Most observers of social policy in the 1990s would agree that to a large extent it was the decade of new public management. The retrenchment of the welfare state, privatisation, markets and competition constituted the thematic overtones for policies and reforms founded on the perception that government bureaucracies had become inefficient (which was intolerable given increasing cost pressures), unresponsive and unaccountable. At the same time, most Western countries did not seek to dismantle their welfare states. The idea was to try to maintain solidarity in ensuring universal access to social services, but at the same time to create more incentives for providers to perform efficiently. As a result, various forms of market-oriented reforms were introduced into social services, with health perhaps leading the way.(1,2)

Regulation and entrepreneurialism
Ambivalence towards market forces was quite evident. Most market-oriented reforms proceeded cautiously, out of concern that the unleashing of vigorous entrepreneurial behaviour would undercut the social values underlying public health systems.(3,4) As a result, no sooner had the entrepreneurial rabbit bounded from the box than the regulatory fox was hot on its tail. More attention, at least on the part of policy analysts, was devoted to regulating the very incentives that had been sought after to cure the ills of bureaucracy, than to the essence of entrepreneurial behaviour in health.(5) This relative emphasis on how to regulate as opposed to optimising the entrepreneurial behaviour that is being regulated persists.

However, at the micro level of health systems (ie, clinics, hospitals, health insurers), entrepreneurial behaviour has evolved on its own and has also been catalysed by the rhetoric and reality of macro health reforms. Healthcare organisations have demonstrated considerable innovative capacity in both the private sector and in government units that have been decentralised in the sense of being delegated authority from government bureaucracies.(6) Entrepreneurial behaviour has expressed itself in new modes of internal governance and management, marketing behaviour, financial management, new interactions with complementary and competing health services in the organisational environment, and more.

Surveying micro-level entrepreneurial developments
The 2006 Annual Conference of the European Health Management Association carried the title Entrepreneurial Behavior: Opportunities and Threats to Health. The Conference provided a renewed attempt to survey entrepreneurial developments at the micro level. In response to our call for abstracts, we received significant responses to the following categories:

  • Entrepreneurship as the introduction of commercial activities in healthcare.
  • Entrepreneurship seen as the introduction of public–private partnerships in healthcare.
  • Entrepreneurship as a form of decentralisation, increasing the freedom for healthcare
  • organisations to respond to market demands.
  • Entrepreneurship as a system of incentives designed to encourage proactive management.
  • Entrepreneurship as a form of creative management.
  • Entrepreneurship as the use of business methods to improve efficiency and effectiveness.
  • Entrepreneurship and human resource issues.

From the abstracts included in the conference, which numbered nearly 100, it can be seen that a great deal of research and organisational experimentation is in progress concerning these dimensions of entrepreneurial behaviour in health systems. Examples include: studies regarding the creation of profit centres within public hospitals; case studies of privatisation of public hospitals and the degree of entrepreneurial freedom this actually induces; motivating employees within a health organisation to undertake entrepreneurial behaviours; behavioural differences among private, public and social entrepreneurs; entrepreneurial behaviour connected with integrated care; utilising consumer and patient feedback as a basis for entrepreneurial behaviour in decentralised health units; the utilisation of research by entrepreneurial health managers; entrepreneurial approaches to resolving conflict and enabling cooperation within health organisations; entrepreneurial innovations in health organisation processes and culture.

Attitudes to entrpreneurialism
Attitudes range from suspicion to grudging recognition and even enthusiasm regarding the role entrepreneurial behaviour can play in healthcare. It was recognised that not only monetary self-interest motivates entrepreneurs, but also the innate desire to compete, to be creative and to achieve self-realisation. Private entrepreneurship coexists with social entrepreneurship; however, we need better understanding of the motivations and mechanisms of the latter in order to take best advantage of the potential contribution to social goals and to the public interest. For example, can private entrepreneurs go beyond providing superior hospital services limited to specific niche markets and implement, or at least complement, a broader public perspective?

Hopefully, this new look at entrepreneurial behaviour from a bottom-up perspective will provide a good complement to the regulatory literature alluded to above. This is important because the literature on entrepreneurial behaviour in health tends to be perceived as focusing on either technological health innovations, or on the response of entrepreneurs to government regulation. Much less attention is paid to the types of issues raised in the previous paragraph. What can be hoped for is a better understanding of the major trends in entrepreneurial behaviour in health management, probing beyond the assumption that the latter is only concerned with the monetary bottom line. A broader and deeper understanding of health entrepreneurship will, among others, address the question of whether entrepreneurial behaviour is also addressed towards attainment of social and public health goals as well as commercial goals.

Moving forward
The next step will be to blend this more sophisticated view of health entrepreneurship with the already significant literature and experience with health system regulation. Is it possible that regulators can rely more on entrepreneurial incentives to achieve social goals? What dangers lie in heavy-handed regulation that rides roughshod over entrepreneurial initiatives that are aimed at more than simply obtaining financial profits? To what extent can physicians and other health providers be induced to participate in entrepreneurial behaviour, producing,perhaps, a superior blend of traditional health system goals with efforts to achieve greater efficiencies and even monetary profits?

There is an inherent contradiction lurking in this endeavour. Entrepreneurship implies freedom to act, unconstrained enough by organisational controls and public regulations to set in place new processes leading to new and desirable outcomes. By providing better understanding of entrepreneurial behaviour at the micro level, the macro level (ie, government regulators) may be better able to intervene to protect social outcomes of health systems. However, this intervention will inevitably constrain the entrepreneurial behaviour that has now been exposed. The trick for public regulators is to find the blend of regulatory tools that can leave entrepreneurial behaviour free enough to find new productive directions while, at the same time, motivating entrepreneurs, both private and social, to serve the overall goals of public health systems.

Perhaps the key notion to keep in mind in this connection is trust. If entrepreneurial behaviour is to be encouraged and given more free reign in health systems, while at the same time expected to serve public goals, regulators and entrepreneurs will have to maintain a modicum of mutual trust. Each side will have to avoid actions that are corrosive to such trust. Governments have to avoid overly heavy- handed microregulation, while entrepreneurs have to include a social welfare function in their aims. It is hoped that a more mature, sophisticated and deeper understanding of innovation in health systems will provide some of the basis for such trust.


  1. Saltman RB, Von Otter C. Voice, choice and the question of civil democracy in the Swedish welfare state. Economic and Industrial Democracy 1989:10:195-209.
  2. Saltman RB, Von Otter C. Implementing planned markets. Philadelphia: Open University Press; 1992.
  3. Chinitz DP, Cohen MA, editors. The changing roles of governments and markets in health care systems. Jerusalem: JDC Brookdale Institute; 1993.
  4. Chinitz DP, Cohen J, editors. Governments and health systems: implications of differing Involvements. Chichester: John Wiley & Sons; 1998.
  5. Saltman RB, Busse R, Mossialos E, editors. Regulating erntrepreneurial behavior in European health care systems. Philadelphia: Open University Press; 2002.
  6. European Health Management Association 2006. Book of abstracts: EHMA Annual Conference: Entrepreneurial behavior – opportunities and threats to health. 2006 June 28-30; Budapest, Hungary.