Working Paper: NBER ID: w21603
Authors: Amitabh Chandra; Amy Finkelstein; Adam Sacarny; Chad Syverson
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.
Keywords: healthcare; market share; hospital quality; patient demand
JEL Codes: D22; D24; I11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| patient choice (I11) | market share (L17) |
| patient satisfaction scores (I11) | market share (L17) |
| hospital quality (I19) | market share (L17) |
| hospital quality (I19) | growth in market share (F62) |
| hospital quality (I19) | allocation to higher quality hospitals (I11) |