The analysis of this report is based on a political economy approach. This approach is justified by the assumption of market failure, where the report seeks to understand the political features which inhibit economic efficiency. As this report is part of a thesis project, much of the theoretical analysis is not detailed here. However, it is important to identify three key understandings from which the theoretical analysis presented is based on.
The first is around the politics of structural choice, which recognises that organisations created through political institutions are inherently political and that the design of these organisations reflects this (Moe 1991).
The second theoretical understanding is about the functioning of political organisations. The foundation of this understanding is on principle agent theory, but goes beyond. In this, it addresses the way in which functioning of these systems can still occur even when interests within organisations do not align (Feldman and Khademian 2002).
The third theoretical understanding takes the functioning of relationships further and considers at the way polycentric systems work. This is especially important in understanding devolved systems, such as DHBs (Ostrom 1996).
Although the application of these workings is not explicitly visible within this report, it is important to keep these theoretical ideas in mind when thinking about structural design.