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Organizational Fragmentation and Care Quality in the U.S. Healthcare System

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  • Randall D. Cebul
  • James B. Rebitzer
  • Lowell J. Taylor
  • Mark E. Votruba

Abstract

Many goods and services can be readily provided through a series of unconnected transactions, but in health care, close coordination over time and within care episodes improves both health outcomes and efficiency. Close coordination is problematic in the U.S. healthcare system because the financing and delivery of care is distributed across a variety of distinct and often competing entities, each with its own objectives, obligations, and capabilities. These fragmented organizational structures lead to disrupted relationships, poor information flows, and misaligned incentives that combine to degrade care quality and increase costs. We illustrate our argument with examples taken from the insurance and hospital industries, and discuss possible responses to the problems resulting from organizational fragmentation.

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  • Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2008. "Organizational Fragmentation and Care Quality in the U.S. Healthcare System," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 93-113, Fall.
  • Handle: RePEc:aea:jecper:v:22:y:2008:i:4:p:93-113
    Note: DOI: 10.1257/jep.22.4.93
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    Cited by:

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    3. Simona Grassi & Ching-to Albert Ma, 2016. "Information acquisition, referral, and organization," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 935-960, November.
    4. Mark McClellan, 2011. "Reforming Payments to Healthcare Providers: The Key to Slowing Healthcare Cost Growth While Improving Quality?," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 69-92, Spring.
    5. James B. Rebitzer & Mark E. Votruba, 2011. "Organizational Economics and Physician Practices," NBER Working Papers 17535, National Bureau of Economic Research, Inc.
    6. Pierre-Thomas Léger & Erin C. Strumpf, 2010. "Système de paiement des médecins : bref de politique," CIRANO Project Reports 2010rp-12, CIRANO.
    7. Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2011. "Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance," American Economic Review, American Economic Association, vol. 101(5), pages 1842-1871, August.
    8. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    9. Larry G. Epstein & Hiroaki Kaido & Kyoungwon Seo, 2016. "Robust Confidence Regions for Incomplete Models," Econometrica, Econometric Society, vol. 84, pages 1799-1838, September.
    10. Brigham Frandsen & James B. Rebitzer, 2014. "Structuring Incentives Within Organizations: The Case of Accountable Care Organizations," NBER Working Papers 20034, National Bureau of Economic Research, Inc.
    11. Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2008. "Organizational Fragmentation and Care Quality in the U.S. Healthcare System," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 93-113, Fall.
    12. Agha, Leila & Frandsen, Brigham & Rebitzer, James B., 2019. "Fragmented division of labor and healthcare costs: Evidence from moves across regions," Journal of Public Economics, Elsevier, vol. 169(C), pages 144-159.
    13. Böckerman, Petri & Laine, Liisa T. & Nurminen, Mikko & Saxell, Tanja, 2020. "Information Integration, Coordination Failures, and Quality of Prescribing," IZA Discussion Papers 13926, Institute of Labor Economics (IZA).
    14. Alan M. Garber & Jonathan Skinner, 2008. "Is American Health Care Uniquely Inefficient?," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 27-50, Fall.
    15. Keith M. Marzilli Ericson & Kimberley H. Geissler & Benjamin Lubin, 2018. "The Impact of Partial-Year Enrollment on the Accuracy of Risk-Adjustment Systems: A Framework and Evidence," American Journal of Health Economics, University of Chicago Press, vol. 4(4), pages 454-478, Fall.
    16. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-680, September.
    17. Marton, James & Yelowitz, Aaron & Talbert, Jeffery C., 2014. "A tale of two cities? The heterogeneous impact of medicaid managed care," Journal of Health Economics, Elsevier, vol. 36(C), pages 47-68.
    18. Sonia Adam-Ledunois & Sébastien Damart, 2016. "The art of collective "making do"... When silos are gone!," Post-Print hal-01362382, HAL.
    19. Marianne Simonsen & Lars Skipper & Niels Skipper & Peter Rønø Thingholm, 2019. "Discontinuity in Care: Practice Closures among Primary Care Providers and Patient Health," Economics Working Papers 2019-08, Department of Economics and Business Economics, Aarhus University.
    20. Cox, James C. & Sadiraj, Vjollca & Schnier, Kurt E. & Sweeney, John F., 2016. "Higher quality and lower cost from improving hospital discharge decision making," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 1-16.
    21. Eric Lammers, 2013. "The Effect Of Hospital–Physician Integration On Health Information Technology Adoption," Health Economics, John Wiley & Sons, Ltd., vol. 22(10), pages 1215-1229, October.
    22. Samuel H. Preston & Jessica Y. Ho, 2009. "Low Life Expectancy in the United States: Is the Health Care System at Fault?," NBER Working Papers 15213, National Bureau of Economic Research, Inc.
    23. Cox, James C. & Sadiraj, Vjollca & Schnier, Kurt E. & Sweeney, John F., 2016. "Higher quality and lower cost from improving hospital discharge decision making," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 1-16.
    24. Timothy Simcoe & Maryaline Catillon & Paul Gertler, 2019. "Who benefits most in disease management programs: Improving target efficiency," Health Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 189-203, February.

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    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • 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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