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Where are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care

43 Pages Posted: 4 Jun 2010  

David M. Cutler

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: May 2010

Abstract

Medical care is characterized by enormous inefficiency. Costs are higher and outcomes worse than almost all analyses of the industry suggest should occur. In other industries characterized by inefficiency, efficient firms expand to take over the market, or new firms enter to eliminate inefficiencies. This has not happened in medical care, however. This paper explores the reasons for this failure of innovation. I identify two factors as being particularly important in organizational stagnation: public insurance programs that are oriented to volume of care and not value, and inadequate information about quality of care. Recent reforms have aspects that bear on these problems.

Suggested Citation

Cutler, David M., Where are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care (May 2010). NBER Working Paper No. w16030. Available at SSRN: https://ssrn.com/abstract=1617032

David M. Cutler (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Harvard University - Harvard Kennedy School (HKS) ( email )

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