Chapter 2 Self-Interest and Opportunism in the Hospital Industry: A Historical Perspective

Economic assumptions of self-interest and opportunism have sparked a debate about their impact on management behavior. This paper addresses this debate in the context of US hospitals. More specifically, the paper addresses whether self-interest and opportunistic behavior describe pre-existing behavior in hospitals. Our analysis concludes that there is no evidence that opportunism was an underlying industry wide behavior prior to the 1980s when economic theories began to shape policies and the industry. While we cannot determine from the evidence why it emerged, it may be linked to system incentives to reduce costs and/or the propagation of economic theories in health administration programs and business schools. Consequently, there is a necessity for on-going debate and future empirical research on this topic.