Contract-Based budgeting in health care: A study of the institutional processes of accounting change

The managed care system is a provider–purchaser model, in which the hospitals sell their output at a predetermined price to public sector purchasers. The purpose of contract-based budgeting (CBB) is to control the flow of resources in this system so that what is budgeted as revenue in the hospitals is budgeted as an expense in the municipalities. This study explores the process of how budgetary bias prevails in municipal and hospital district budgets despite the introduction of CBB. The data, which consists of budgetary documents and interviews, is informed by the framework by Burns and Scapens (Management Accounting Research, 11(1), pp. 3–25, 2000). The results obtained indicate that the changes in budgeting practices were not revolutionary, but incorporated the prevailing institutionalised practices into new ones. It also appears that the municipal frame budgets, conservative revenue estimation and the strict requirements for budgetary balance have a great potential to resist demands of change originating from outside.