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Healthcare Exceptionalism? Productivity and Allocation in the U.S. Healthcare Sector

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 hospitals are the result of idiosyncratic, institutional 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, we also find evidence against the conventional wisdom that the healthcare sector does not operate like an industry subject to standard market forces. In particular, we find that hospitals that are more productive at treating heart attacks have higher market shares at a point in time and are more likely to expand over time. For example, a 10 percent increase in hospital productivity today is associated with about 4 percent more patients in 5 years. Taken together, these facts suggest that the healthcare sector may have more in common with "traditional" sectors than is often assumed.

Suggested Citation

  • 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.
  • Handle: RePEc:nbr:nberwo:19200
    Note: AG HC IO PE PR
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. #HEJC papers for August 2013
      by academichealtheconomists in The Academic Health Economists' Blog on 2013-08-01 04:00:48

    Citations

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    Cited by:

    1. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2015. "Healthcare Exceptionalism? Performance and Allocation in the U.S. Healthcare Sector," NBER Working Papers 21603, National Bureau of Economic Research, Inc.
    2. Alex Bryson & John Forth, 2018. "The Impact of Management Practices on SME Performance," National Institute of Economic and Social Research (NIESR) Discussion Papers 488, National Institute of Economic and Social Research.
    3. Ryan C. McDevitt & James W. Roberts, 2014. "Market structure and gender disparity in health care: preferences, competition, and quality of care," RAND Journal of Economics, RAND Corporation, vol. 45(1), pages 116-139, March.
    4. Christopher Walters, 2014. "Inputs in the Production of Early Childhood Human Capital: Evidence from Head Start," NBER Working Papers 20639, National Bureau of Economic Research, Inc.
    5. Nicola Lacetera & Bradley J. Larsen & Devin G. Pope & Justin R. Sydnor, 2016. "Bid Takers or Market Makers? The Effect of Auctioneers on Auction Outcome," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 195-229, November.
    6. Rune Stenbacka & Mihkel Tombak, 2014. "Optimal Co-Payment Policy In Health Care: Competition, Ownership Structure And Quality Provision," Working Papers 140004, Canadian Centre for Health Economics.
    7. Joseph Doyle & John Graves & Jonathan Gruber, 2015. "Uncovering Waste in U.S. Healthcare," NBER Working Papers 21050, National Bureau of Economic Research, Inc.
    8. Amitabh Chandra & Tyler Hoppenfeld & Jonathan Skinner, 2016. "Are Black-White Mortality Rates Converging? Acute Myocardial Infarction in the United States, 1993–2010," NBER Chapters,in: Insights in the Economics of Aging, pages 205-222 National Bureau of Economic Research, Inc.
    9. David C. Chan, Jr, 2016. "Informational Frictions and Practice Variation: Evidence from Physicians in Training," NBER Working Papers 21855, National Bureau of Economic Research, Inc.
    10. 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.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • 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

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