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American Economic Review Vol. 106 No. 8 2016

Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector

Amitabh Chandra1; Amy Finkelstein2; Adam Sacarny3; Chad Syverson4

1 Harvard Kennedy School, Mailbox 114, 79 JFK Street, Cambridge, MA 02138, and NBER (e-mail: ) · 2 Department of Economics, 77 Massachusetts Avenue, Building E52, Room 442, Cambridge, MA 02139, and MIT and NBER (e-mail: ) · 3 Department of Health Policy and Management, Columbia University Mailman School of Public Health, 4th Floor, 722 West 168 Street, New York, NY 10032 (e-mail: ) · 4 Chicago Booth, Room 519, 5807 South Woodlawn Avenue, Chicago, IL 60637, and NBER (e-mail: )

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Abstract

The conventional wisdom for the healthcare sector is that idiosyncratic features leave little scope for market forces to allocate consumers to higher performance producers. However, we find robust evidence - across several different conditions and performance measures - that higher quality hospitals have higher market shares and grow more over time. The relationship between performance and allocation is stronger among patients who have greater scope for hospital choice, suggesting that patient demand plays an important role in allocation. Our findings suggest that healthcare may have more in common with "traditional" sectors subject to market forces than often assumed.

DOI
10.1257/aer.20151080
Volume
106
Issue
8
Pages
2110-2144
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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