Ethel Zimmerman Wiener Professor of Public Policy, HKS; Henry and Allison McCance Professor of Business Administration, HBS
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.
Chandra, Amitabh, Amy Finkelstein, Adam Sacarny, and Chad Syverson. "Healthcare Exceptionalism? Performance and Allocation in the U.S. Healthcare Sector." HKS Faculty Research Working Paper Series RWP15-058, October 2015.