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Productivity Dispersion in Medicine and Manufacturing

Author

Listed:
  • Amitabh Chandra
  • Amy Finkelstein
  • Adam Sacarny
  • Chad Syverson

Abstract

The conventional wisdom in health economics is that large differences in average productivity across US hospitals are the result of idiosyncratic features of the healthcare sector which dull the role of market forces. Strikingly, however, we find that productivity dispersion in heart attack treatment across hospitals is, if anything, smaller than in narrowly defined manufacturing industries such as ready-mixed concrete. While this fact admits multiple interpretations, it suggests that healthcare may have more in common with "traditional" sectors than is often assumed, and relatedly, that insights from research on productivity and allocation in other sectors may enrich analysis of healthcare.

Suggested Citation

  • Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2016. "Productivity Dispersion in Medicine and Manufacturing," American Economic Review, American Economic Association, vol. 106(5), pages 99-103, May.
    • Handle: RePEc:aea:aecrev:v:106:y:2016:i:5:p:99-103
    Note: DOI: 10.1257/aer.p20161024
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    References listed on IDEAS

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    1. Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), 2011. "Handbook of Health Economics," Handbook of Health Economics, Elsevier, volume 2, number 2.
    2. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2013. "Healthcare Exceptionalism? Productivity and Allocation in the U.S. Healthcare Sector," NBER Working Papers 19200, National Bureau of Economic Research, Inc.
    3. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
    4. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2016. "Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector," American Economic Review, American Economic Association, vol. 106(8), pages 2110-2144, August.
    5. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    6. Chad Syverson, 2004. "Product Substitutability and Productivity Dispersion," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 534-550, May.
    7. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Sacarny, Adam, 2018. "Adoption and learning across hospitals: The case of a revenue-generating practice," Journal of Health Economics, Elsevier, vol. 60(C), pages 142-164.
    2. Di Giacomo, Marina & Piacenza, Massimiliano & Salmasi, Luca & Turati, Gilberto, 2025. "Understanding labour productivity in maternity wards," Labour Economics, Elsevier, vol. 96(C).
    3. Li, Yan & Zhang, Qi & Wang, Ge & McLellan, Benjamin & Liu, Xue Fei & Wang, Le, 2018. "A review of photovoltaic poverty alleviation projects in China: Current status, challenge and policy recommendations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 214-223.
    4. Amitabh Chandra & Douglas O Staiger, 2020. "Identifying Sources of Inefficiency in Healthcare [“The Determinants of Productivity in Medical Testing: Intensity and Allocation of Care,”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 785-843.
    5. Figal Garone, Lucas & López Villalba, Paula A. & Maffioli, Alessandro & Ruzzier, Christian A., 2020. "Firm-level productivity in Latin America and the Caribbean," Research in Economics, Elsevier, vol. 74(2), pages 186-192.
    6. Amitabh Chandra & Carrie H. Colla & Jonathan S. Skinner, 2023. "Productivity Variation and Input Misallocation: Evidence from Hospitals," NBER Working Papers 31569, National Bureau of Economic Research, Inc.
    7. Kyle R. Myers & Wei Yang Tham & Jerry Thursby & Marie Thursby & Nina Cohodes & Karim Lakhani & Rachel Mural & Yilun Xu, 2023. "New Facts and Data about Professors and their Research," Papers 2312.01442, arXiv.org.
    8. Raja, Chandni, 2023. "How do hospitals respond to input regulation? Evidence from the California nurse staffing mandate," Journal of Health Economics, Elsevier, vol. 92(C).
    9. Manhal Ali & Reza Salehnejad & Mohaimen Mansur, 2018. "Hospital heterogeneity: what drives the quality of health care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(3), pages 385-408, April.

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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