Productivity and Quality in Health Care: Evidence from the Dialysis Industry

Paul L. E. Grieco and Ryan McDevitt

The Review of Economic Studies, 2017, vol. 84, issue 3, 1071-1105

Abstract: We show that healthcare providers face a tradeoff between increasing the number of patients they treat and improving their quality of care. To measure the magnitude of this quality-quantity tradeoff, we estimate a model of dialysis provision that explicitly incorporates a centre’s unobservable and endogenous choice of treatment quality while allowing for unobserved differences in productivity across centres. We find that a centre that reduces its quality standards such that its expected rate of septic infections increases by 1 percentage point can increase its patient load by 1.6%, holding productivity, capital, and labour fixed; this corresponds to an elasticity of quantity with respect to quality of 0.2. Notably, our approach provides estimates of productivity that control for differences in quality, whereas traditional methods would misattribute lower-quality care to greater productivity.

Keywords: Productivity; Quality variation; Health care (search for similar items in EconPapers)
JEL-codes: D24 I1 L2 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (21)

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