Behind the Scenes of Operation Theatres

Annu Kotiranta, Martti Kulvik, Sirpa Maijanen and Timo Seppälä

No 271 in ETLA B from The Research Institute of the Finnish Economy

Abstract: Even though value chain analysis has proven to be problematic when applied to services, we test the compatibility of the methodology to the complex world of health care services. Health care sector differentiates from the traditional industries in many respects: providers can exercise power on customer behaviour because of a particularly strong information asymmetry and further, the sector is heavily regulated. Three case studies, a two surface dental filling (basic health care service), hernia repair (specialized health care service), and thrombolytic therapy of stroke (acute health care service provided at central hospital), are used to examine the value chains of health care. Despite the complexity and diversity of the seemingly standardised case studies, some general remarks can be made. First, it turns out that health care generates value mostly locally: especially simple, public sector health care processes that involve very little outsourcing, retain most of the value within the country. Second, the costs of the health care services are dominated by overhead costs. As a result, the value chain analysis captures more the characteristics of the production unit than the characteristics of the health care product itself. In fact, it seems that health care service prices correlate quite poorly with the actual costs of production. We conclude by stating that the value chain analysis can be applied to the health care sector and health care products. However, it seems that the most interesting results emerge in the spill-over insights of the service in focus.

Keywords: Healthcare; value added; value chain; metrics; patient; structural solutions; cost savings (search for similar items in EconPapers)
Date: Written 2016-06-08
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