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  3. American Economic Review
  4. August 2016
  5. Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

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

  • Amitabh Chandra
  • Amy Finkelstein
  • Adam Sacarny
  • Chad Syverson
American Economic Review
vol. 106, no. 8, August 2016
(pp. 2110–44)
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Abstract

The conventional wisdom for the health care 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 health care may have more in common with "traditional" sectors subject to market forces than often assumed.

Citation

Chandra, Amitabh, Amy Finkelstein, Adam Sacarny, and Chad Syverson. 2016. "Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector." American Economic Review, 106 (8): 2110–44. DOI: 10.1257/aer.20151080

Additional Materials

JEL Classification

  • I11 Analysis of Health Care Markets
  • L25 Firm Performance: Size, Diversification, and Scope