Knowledge that Transforms

Measuring the social gains from recent technological advances is difficult because there are no real output indexes for some important adopters. Measurement methods that infer the willingness to pay of the adopting industries from the derived demand curve for a new technology overcome this difficulty. The derived demand for high-speed computers for use in banks, finance, and insurance is shown to imply a very large social gain to computerization that was not captured by manufacturers of computers.

[Rising hospital costs are of increasing concern to government and industry. The growth and financial success of for-profit hospitals (FPs) in an industry that was once solely populated by nonprofit hospitals (NPs) have suggested that FP business practices may be a more cost-effective way to manage health care services. However, studies using accounting and other operating data yield conflicting and ambiguous conclusions that do not resolve questions about relative performance of FPs vs. NPs. A comparison of FP and NP financial statements suggests that current financial reporting methods can be misleading, or at best of little help, in assessing the performance and cost structure of the two types of hospitals. The key problem is that financial statements prepared according to present standards do not provide sufficient information for accurate comparative analysis of FPs and NPs. Additional data about volume and output mix and about the financial impact of differences in legal status are needed to make hospital financial statements relevant and useful for understanding and containing health care costs.]