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

47 Pages Posted: 7 Oct 2015 Last revised: 16 Jul 2018

See all articles by Amitabh Chandra

Amitabh Chandra

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

Amy Finkelstein

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Adam Sacarny

Massachusetts Institute of Technology (MIT) - Department of Economics

Chad Syverson

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

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Date Written: October 2015

Abstract

The conventional wisdom in health economics is that idiosyncratic features of the healthcare sector leave little scope for market forces to allocate consumers to higher performance producers. However, we find robust evidence across a variety of conditions and performance measures that higher quality hospitals tend to have higher market shares at a point in time and expand more over time. Moreover, we find that the relationship between performance and allocation is stronger among patients who have greater scope for hospital choice, suggesting a role for patient demand in allocation in the hospital sector. Our findings suggest that the healthcare sector may have more in common with “traditional” sectors subject to standard market forces than is often assumed.

Suggested Citation

Chandra, Amitabh and Finkelstein, Amy and Sacarny, Adam and Syverson, Chad, Healthcare Exceptionalism? Performance and Allocation in the U.S. Healthcare Sector (October 2015). NBER Working Paper No. w21603. Available at SSRN: https://ssrn.com/abstract=2670388

Amitabh Chandra (Contact Author)

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

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Amy Finkelstein

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Adam Sacarny

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Chad Syverson

University of Chicago - Booth School of Business ( email )

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National Bureau of Economic Research (NBER)

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