Productivity and Technological Change in Healthcare

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Abstract

Summary

Since technological change in the health sector predominantly takes the form of improving the quality of output and introducing new products, and because conventional measures of productivity are not well suited to taking such trends into account, our ability to accurately measure the true rate of aggregate productivity growth in healthcare is inherently limited. Nevertheless, there is reason to believe that more consistent application of recent methods of cost-effectiveness and cost-benefit analysis could yield substantial productivity gains, both in terms of making more efficient use of existing technology, and of more efficiently exploiting the opportunities for productivity growth created by advancing technology. It is also argued that the changing incentive structures likely to result from the attempts to reform healthcare in many countries will put pressure on decision-makers to make more extensive use of these productivity-enhancing techniques.

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