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

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  • David M. Cutler

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://www.nber.org/papers/w16030.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16030.

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Date of creation: May 2010
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Publication status: published as David M. Cutler. "Where are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care," in Josh Lerner and Scott Stern, editors, "Innovation Policy and the Economy, Volume 11" University of Chicago Press (2010)
Handle: RePEc:nbr:nberwo:16030

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Cited by:
  1. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.

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