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Competition in Medical Services and the Quality of Care: Concepts and History

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  • Mark V. Pauly

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Abstract

This paper reviews the concept of optimal quality in medical care from an economic viewpoint. It also provides some data on recent trends in competition in the health care sector. Economically optimal quality reflects a tradeoff of marginal benefits against (minimized) marginal cost. Actual quality may be suboptimal either because of technical inefficiency in the production of quality or because consumers fail to make proper choices. In concept, competition, if supplemented by adequate information, can help. Overall competition in the hospital industry has declined modestly in recent years, but competition in markets for more generously reimbursed specific services, such as coronary artery bypass grafting, has increased.

Suggested Citation

  • Mark V. Pauly, 2004. "Competition in Medical Services and the Quality of Care: Concepts and History," International Journal of Health Economics and Management, Springer, vol. 4(2), pages 113-130, June.
  • Handle: RePEc:kap:ijhcfe:v:4:y:2004:i:2:p:113-130
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    Cited by:

    1. David M. Cutler & Robert S. Huckman & Jonathan T. Kolstad, 2010. "Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery," American Economic Journal: Economic Policy, American Economic Association, pages 51-76.
    2. Ellert, Alexander & Urmann, Oliver, 2012. "Competition in the market for supplementary health insurance: The case of competing nonprofit sickness funds," Working Papers on Risk and Insurance 25 [rev.], University of Hamburg, Institute for Risk and Insurance.
    3. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, Elsevier.
    4. Godager, Geir & Iversen, Tor & Albert Ma, Ching-to, 2012. "Competition, Gatekeeping, and Health Care Access," HERO On line Working Paper Series 2012:2, Oslo University, Health Economics Research Programme.
    5. Godager, Geir & Iversen, Tor & Ma, Ching-to Albert, 2015. "Competition, gatekeeping, and health care access," Journal of Health Economics, Elsevier, vol. 39(C), pages 159-170.
    6. David M. Cutler & Robert S. Huckman & Jonathan T. Kolstad, 2010. "Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery," American Economic Journal: Economic Policy, American Economic Association, pages 51-76.
    7. Kolstad, Jonathan T. & Cutler, David M. & Huckman, Robert Steven, 2010. "Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery," Scholarly Articles 5344226, Harvard University Department of Economics.

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