Institutions—including national, state, and local governments; regulatory agencies; hospitals; and the medical profession itself—play a central role in health care. Health care institutions shape the interactions between patients and physicians, payers and providers, and privileged insiders and disadvantaged outsiders. Institutions create rights and duties, preserve organizational memory, and establish standard operating procedures. Institutions thus promote stability, producing health care outcomes that remain constant even as the economic, political, and social world around them changes.

Yet institutions can also be a source of dynamism in health care. New institutions can emerge from struggles among actors to acquire power or to solve problems. As Karen Orren and Stephen Skowronek (2004) argue, new institutions typically do not eliminate or displace old institutions but are simply layered atop them, creating frictions that are themselves an engine for political development and change. Moreover, the function...

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