Where Are The Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care
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.
This paper was prepared for the NBER meeting on Innovation Policy and the Economy. I am grateful to Melinda Beeuwkes-Buntin, Josh Lerner, and Scott Stern for helpful conversations and to the National Institutes on Aging for research support. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
- The high and rapidly rising cost of health care in the U.S. remains a critical issue. High costs burden the fed-eral budget due to the...
Where Are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care, David M. Cutler. in Innovation Policy and the Economy, Volume 11, Lerner and Stern. 2010