Transaction Cost Theory And Modern Medical Care

Paper Summary:

Discusses the economic costs and advantages to organizations. Transaction theory. Focus on health care industry and employee turnover. Goal of hospitals for health care excellence and cost control. Impact of employee turnover on hospital budgets; drain on profits and efficiency. Staff shortages and elimination of services. Threat to revenues.

From the Paper:

"Transaction cost theory, as proposed by Ronald Coase and Oliver Williamson, states that organizations experience enormous economic costs and corresponding economic advantages in each and everyone of their captivities or transactions (Slater & Spencer, 2000). For many years, the dominant neoclassical approach to the theory of the firm suggested that nothing significant would be gained from peering into the "black box" called the firm and that it was enough to know that a firm operated to maximize profits. In the core model of perfect competition, this was achieved subject to known technology and known prices.

Transaction cost theory takes into account the assertion that the firm exists because of its capacity to economize on the costs of market-oriented production (Slater & Spencer, 2000). The firm itself emerges as the most superior economic device for the ..."

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