Productivity and quality in health care: Evidence from the dialysis industry

Paul L.E. Grieco, Ryan C. Mcdevitt

Research output: Contribution to journalArticle

5 Scopus citations

Abstract

We show that healthcare providers face a tradeoffbetween 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.

Original languageEnglish (US)
Pages (from-to)1071-1105
Number of pages35
JournalReview of Economic Studies
Volume84
Issue number3
DOIs
StatePublished - Jan 1 2017

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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