Institutt for administrasjon og organisasjonsvitenskap

Gaming the system and accountability relations: Negative side-effects of activity-based funding in the Norwegian hospital system

Working paper by Per Lægreid and Simon Neby.


Performance management systems are introduced to enhance efficiency and effectiveness in public sectors across the world. We examine four "scandals" cases related to coding practice in Norwegian hospitals followed by performance audits by the Auditor General and a national revision of the system of coding practices.


The experience with activity-based financing schemes in combination with the DRG system from Norwegian healthcare, is that such systems create loopholes or opportunities for behavior that undermine both the very ambitions of performance management systems and trust-based management logics.


A multiplicity of accountability mechanisms are employed to redeem the problem, but have yet to be successful: The organizational fragmentation and the institutional complexity that challenges the success of performance management also seem to challenge to merits of accountability as a means to resolve negative side-effects

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