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Where Are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care

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  • Cutler, David M.
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    Abstract

    Medical care is characterized by enormous inefficiency. Costs are higher and outcomes worse than almost all analyses of the industry suggest should occur. In other industries characterized by inefficiency, efficient firms expand to take over the market, or new firms enter to eliminate inefficiencies. This has not happened in medical care, however. This paper explores the reasons for this failure of innovation. I identify two factors as being particularly important in organizational stagnation: public insurance programs that are oriented to volume of care and not value, and inadequate information about quality of care. Recent reforms have aspects that bear on these problems.

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    File URL: http://dash.harvard.edu/bitstream/handle/1/5345877/where%20are%20the%20healthcare%20entrepreneurs.pdf
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    Bibliographic Info

    Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 5345877.

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    Date of creation: 2010
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    Publication status: Published in Innovation Policy and the Economy
    Handle: RePEc:hrv:faseco:5345877

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    1. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 6(3), pages 3-21, Summer.
    2. Chernew, Michael & Cutler, David & Keenan, Patricia S., 2005. "Increasing Health Insurance Costs and the Decline in Health Insurance Coverage," Scholarly Articles 2660660, Harvard University Department of Economics.
    3. Neeraj Sood & Arkadipta Ghosh & José J. Escarce, 2009. "Employer-Sponsored Insurance, Health Care Cost Growth, and the Economic Performance of U.S. Industries," Mathematica Policy Research Reports, Mathematica Policy Research 6492, Mathematica Policy Research.
    4. Katherine Ho, 2009. "Barriers to Entry of a Vertically Integrated Health Insurer: An Analysis of Welfare and Entry Costs," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 18(2), pages 487-545, 06.
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    Cited by:
    1. Martin Gaynor & Robert J Town, 2012. "Competition in Health Care Markets," The Centre for Market and Public Organisation, Department of Economics, University of Bristol, UK 12/282, Department of Economics, University of Bristol, UK.

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