Health Economics

Foundational Research on Health Care Markets and Policies

Program on Economics of Health Care Delivery

The United States spends more per person on health care than any other country, yet the value produced is questionable. The provision of health care services accounts for almost all of health spending. Understanding the determinants of the cost and effectiveness of health care delivery is essential to improving the efficiency and outcomes of care. 

Health care delivery is highly complex, driven by biology and biomedical science, by the human beings and organizations that produce and apply biomedical knowledge, by the economic and organizational incentives and public policies that shape their behavior, and by the patients and social context in which they live. Effective solutions must recognize these complexities. 

In 2017, the Becker Friedman Institute will launch the Program on Economics of Health Care Delivery, which aims to use economic theory to understand how to improve health outcomes and the efficiency of health care. The program will also partner with health care organizations to increase researchers’ access to electronic health records, claims, and patient-reported data. 

Large teams and hyper-specialization often produce health care that is fragmented and poorly coordinated. Economic theories of efficient resource allocation, human capital investment, information economics, and mechanism design are central to streamlining health systems. Modern economic analysis also provides insights into the importance of education, income, family, and community in health behaviors.

This program will be directed by David O. Meltzer, MD, PhD, whose research uses economic theory to assess the value of medical technologies and improve the division of labor in health care. Meltzer’s research team developed and implemented the Comprehensive Care Physician (CCP) Program, in which patients at high risk of hospitalization receive care from the same physician in the clinic and hospital. A 2,000-patient study of the effects on patient care, outcomes, and costs is nearing completion. Preliminary results have motivated dissemination nationally and internationally.