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There is an increasing interest in understanding how innovation processes can address current challenges in healthcare. The purpose of this paper is to analyze the wider socio-economic context and conditions for such innovation processes in the Stockholm region, using the functional dynamics approach to innovation systems (ISs).

The analysis is based on triangulation using data from 16 in-depth interviews, two workshops, and additional documents. Using the functional dynamics approach, critical structural and functional components of the healthcare IS were analyzed.

The analysis revealed several mechanisms blocking innovation processes such as fragmentation, lack of clear leadership, as well as insufficient involvement of patients and healthcare professionals. Furthermore, innovation is expected to occur linearly as a result of research. Restrictive rules for collaboration with industry, reimbursement, and procurement mechanisms limit entrepreneurial experimentation, commercialization, and spread of innovations.

In this study, the authors analyzed how certain functions of the functional dynamics approach to ISs related to each other. The authors grouped knowledge creation, resource mobilization, and legitimacy as they jointly constitute conditions for needs articulation and entrepreneurial experimentation. The economic effects of entrepreneurial experimentation and needs articulation are mainly determined by the stage of market formation and existence of positive externalities.

Stronger user involvement; a joint innovation strategy for healthcare, academia, and industry; and institutional reform are necessary to remove blocking mechanisms that today prevent innovation from occurring.

This study is the first to provide an analysis of the system of innovation in healthcare using a functional dynamics approach, which has evolved as a tool for public policy making. A better understanding of ISs in general, and in healthcare in particular, may provide the basis for designing and evaluating innovation policy.

Policy makers are applying market-inspired competition and financial incentives to drive efficiency in healthcare. However, a lack of knowledge exists about the process whereby incentives are filtered through organizations to influence staff motivation, and the key role of managers is often overlooked. The purpose of this paper is to explore the strategies managers use as intermediaries between financial incentives and the individual motivation of staff. The authors use empirical data from a local case in Swedish specialized care.

The authors conducted an exploratory qualitative case study of a patient-choice reform, including financial incentives, in specialized orthopedics in Sweden. In total, 17 interviews were conducted with professionals in managerial positions, representing six healthcare providers. A hypo-deductive, thematic approach was used to analyze the data.

The results show that managers applied alignment strategies to make the incentive model motivating for staff. The managers’ strategies are characterized by attempts to align external rewards with professional values based on their contextual and practical knowledge. Managers occasionally overruled the financial logic of the model to safeguard patient needs and expressed an interest in having a closer dialogue with policy makers about improvements.

Externally imposed incentives do not automatically motivate healthcare staff. Managers in healthcare play key roles as intermediaries by aligning external rewards with professional values. Managers’ multiple perspectives on healthcare practices and professional culture can also be utilized to improve policy and as a source of knowledge in partnership with policy makers.