HMGT 435 WEEK 3 PRO 3

CHAPTER

277

17REGULATION

Learning Objectives

After reading this chapter, students will be able to

• describe the importance of regulation for managers; • explain the interest group model of regulation; • analyze the effects of regulations on firms, rivals, and consumers; and • discuss alternative approaches to market failure.

Key Concepts

• Healthcare is extensively regulated. • Regulation can make or break an organization (or its competitors). • The objective of regulation is consumer protection. • The rationale for consumer protection regulations is consumer

ignorance. • Legislation and regulation reflect interest group politics. • When markets are imperfect, regulation cannot always improve

outcomes. • Providers are likely to “capture” the regulatory process. • Market responses to consumer ignorance can limit the need for

regulation.

17.1 Introduction

Healthcare is extensively regulated, and new regulations are constantly under consideration. Regulation is important to managers for five reasons:

1. Changes to regulations can make or break an organization. For example, in 2016 some health insurers withdrew from Affordable Care Act marketplaces. Many of those who withdrew concluded that the

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C o p y r i g h t 2 0 1 9 . H e a l t h A d m i n i s t r a t i o n P r e s s .

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reinsurance, risk corridor, and risk adjustment regulations created too much uncertainty for them to remain (Adelberg and Bagley 2016).

2. In some circumstances, firms can use regulations to gain a competitive edge, especially when the regulations can be used to prevent entry by a potential rival. For example, Carilion Children’s Hospital was able to use the Virginia certificate-of-need law to prevent the construction of a competing neonatal intensive care unit (Boehm 2017). Claims of regulatory violations by competitors can delay or derail projects, even if the claims are ultimately dismissed. For these reasons, managers must understand the impact of regulations on their organizations, react effectively to changes to regulations, and know when political action is necessary.

3. Managers need to understand the impetus behind healthcare regulation. Regulations are politically acceptable because the complexity of healthcare makes consumers feel vulnerable. Healthcare organizations must address these feelings of vulnerability because failure to do so invites additional regulation or loss of business.

4. Managers need to understand that legislating and regulating are continuing political contests. Most organizations have little to gain and much to lose in these risky contests. Few organizations can command enough political power to win lasting advantages through the political process, but all organizations need to be aware of the threats these contests pose.

5. Some regulations work poorly because they conflict with powerful financial incentives. Many of the same incentives that reinforce or undermine regulations also affect private contracts. Managers must know when regulations or contracts will work and when incentives will undermine them.

As noted in chapter 16, markets and regulation are inseparable. Mar- kets function badly with poorly designed rules, and regulations work badly when they conflict with market incentives. How well a market functions depends crucially on its regulatory structure.

17.2 Market Imperfections

Objections to regulation often stress that unfettered markets serve consumers well. This assertion may be true for perfectly competitive markets, but most healthcare markets fall far short of this ideal. At the heart of these imperfec- tions lies “rational ignorance,” or consumers’ inability to make good choices. Before we discuss this important issue in healthcare regulation, let us look at

certificate-of-need law A law that requires state approval of healthcare construction projects.

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the three other main imperfections that beset healthcare markets: insurance, market power, and externalities.

17.2.1 Insurance By distorting consumers’ incentives, insurance reduces the likelihood that healthcare markets will function ideally. Patients are shielded from the true costs of healthcare, and even the most ethical provider will feel comfortable recommending goods and services that the patient would be unwilling to buy if the patient faced the full cost. Moreover, the healthcare system in the United States limits the role of consumers in choosing insurance plans. Because patients are insulated from the true costs of care, their healthcare choices are unlikely to fully reflect their values. This lack of connection between what consumers value and what healthcare products cost is an important market imperfection.

17.2.2 Market Power Most healthcare providers have some market power, which means prices will exceed marginal cost. To guarantee that markets will allocate resources at least as well as any other system, prices need to reflect the opportunity cost of using a good or service. By driving a wedge between the costs and prices of products, market power compounds the distortions introduced by insur- ance and may cause markets to function poorly. Moreover, in markets with firms that have market power, price controls can be useful tools. In a perfectly competitive market, price controls can be irrelevant (when market prices fall below regulated levels) or harmful (when market prices rise above regulated levels). When organizations have significant market power, a third outcome is possible: Price controls can result in lower prices and higher output. Price controls are not guaranteed to work in such markets, however; they can still be irrelevant or harmful. But price controls can be beneficial if the distortions they create are smaller than the distortions they remove.

17.2.3 Externalities Some healthcare issues involve significant externalities. As noted in chapter 16, an externality is a benefit received by, or a cost imposed on, someone who is not a party to a transaction. For example, installation of a catalytic converter in a car in Los Angeles will make the air cleaner not only for the owner of the car but also for others who live there and across the country. Markets tend not to work well when externalities are significant. Consumers and producers generally focus on the private benefits of transactions, which results in underconsumption of products that generate external benefits and overconsumption of products that generate external costs. Not surpris- ingly, the regulatory role of government tends to be substantial in these

externality A benefit or cost accruing to someone who is not a party to the transaction that causes it.

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instances. For example, consider three activities that generate externalities: the search for new knowledge, the control of communicable diseases, and the maintenance of the environment. Patent and copyright laws restrict use of new knowledge, so producers are able to profit from selling it and thus are motivated to produce it. Public health regulations can mandate immunizations or require treatment of those infected with communicable diseases. Environmental regulations may restrict how resources are used or effectively change ownership rights. The details of these regulations can be controversial, but few societies leave resource allocation in such areas entirely to market forces.

17.3 Rational Consumer Ignorance

Healthcare regulations serve multiple purposes, but the ostensible objective of most regulations has long been consumer protection. The argument is that consumers need protection because they are rationally ignorant about the healthcare choices they must make.

At some point, everyone has difficulty making healthcare choices. In many cases decision makers have to rely on ambiguous or incomplete information. Although the scientific aura of modern medicine may suggest otherwise, many therapies lack a firm scientific basis. Even when the scientific evidence is good (in cases where investigators have carried out controlled clinical trials), decision makers may have a hard time applying it. Moreover, the results of controlled trials do not always translate to the uncontrolled environment of community practice. Even valid evidence involves probabili- ties, and most people (including most healthcare providers) have difficulty using this sort of information well. We tend to see patterns where none exist, place too much emphasis on cases that are memorable or recent, and ignore the rules of probability.

Patients face additional problems. They often must make decisions when they do not feel well and are experiencing a great deal of stress. They typically lack the experience, information, and skills they need to make healthcare choices. Even after they have chosen a course of action, consum- ers may have difficulty assessing whether they were diagnosed correctly, whether they were prescribed the right therapy, and whether that therapy was executed properly.

The ignorance of most patients is explainable. Few of us know the healthcare choices we will have to make or when we will have to make them. We do not want to invest the time to inform ourselves because we might not ever use the information. We would rather have somebody else do the research. Of course, rational ignorance is not universal. Patients with chronic

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illnesses often are well informed about their care because they expect to make ongoing decisions and are motivated to become knowledgeable.

Consumers’ struggle with medical decisions makes them vulnerable in a number of ways. Consumers often do not know when to seek care. They can have difficulty evaluating the recommendations of healthcare profession- als, the quality of care, or the price of that care. They may be unable to dif- ferentiate care that is worth more from care that costs more. To reduce their vulnerability, consumers may turn to medical professionals for advice.

Unfortunately, securing provider recommendations does not render consumers unassailable. Providers often have incentives to be imperfect agents. A provider may sell a product because the provider is being paid by the producer to sell it, or a provider may recommend a therapy because it is more profitable than another treatment. Patients may wind up undergo- ing treatment that is ineffective or harmful, or they may take the advice of incompetent or unethical providers. In short, relying on providers for advice can reduce, but not necessarily efface, consumers’ vulnerability.

For these reasons, providers have an interest in reducing consumers’ concerns about their vulnerability. Consumers who cannot distinguish good advice from bad may ignore all of it. Consumers who cannot distinguish reliable from unreliable healthcare professionals may decide to forgo care. Regulations serve provider interests by signaling quality to consumers. As long as competent, trustworthy professionals find it easier to live with the regulations than incompetent, untrustworthy professionals do, regulations can be useful for both consumers and providers. Indeed, for this reason, much of the demand for regulation comes from the groups to be regulated, and many groups engage in self-regulation. For example, a group of physi- cians with a particular specialty may decide to create regulations that will keep lesser-qualified physicians out of the specialty. This approach would help the group’s own market share and help the public.

Rational ignorance and distortions induced by insurance, market power, and externalities will continue to make healthcare markets imperfect. Remember, however, that market regulation of such influences does not guarantee improved outcomes. Regulations are usually imperfectly designed and imperfectly implemented. In addition, the consumer protection rationale of regulations may be just that: a rationale. Regulations can be used to gain a competitive advantage and may harm, not help, consumers.

17.4 The Interest Group Model of Regulation

Legislation need not serve the public interest. Given that groups can use reg- ulations to expand their markets and gain market power, the interest group

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model of regulation argues that legislatures are similar to markets, in that individuals and groups seek regulations to further their interests. Regulatory barriers to competition are often better than other competitive advantages because they are often harder for competitors to breach (especially for new firms or firms from outside an area, which have little or no political influ- ence). Product features can be duplicated and marketing plans can be copied by even the most insignificant start-up firm, but large, well-established firms have significant political advantage.

17.4.1 Limiting Competition One of the best ways to gain market power is to limit competition. Regula- tion is an effective way of limiting competition. For example, licensure laws appear to have been used to limit entry by telehealth providers (Gaynor, Mostashari, and Ginsburg 2017). Similarly, dental societies have long sup- ported state laws prohibiting persons not licensed as dentists to fit and dis- pense dentures. Although lobbying the legislature to pass laws to prevent competition is legal, working together to prevent competition is illegal. In addition, the industry being regulated is likely to control the regulatory process, so consumer protection legislation may protect existing firms, not the consumer. Managers cannot ignore politics; doing so can put an orga- nization at risk.

17.4.2 Licensure Licensure is professional control of the regulatory process. A profession can be regulated in many ways. Professional regulation often protects the eco- nomic interests of the regulated group far better than it protects the health and safety interests of the public. States generally regulate health profession- als via licensure, certification, and registration. Licensure prohibits people from performing the duties of a profession without meeting requirements set by the state. Certification prohibits those who do not meet requirements set by the state from using a title, but not from practicing. Registration requires practitioners to file their names, addresses, and relevant qualifications.

Licensure is the most restrictive form of regulation. It can prohibit practice by individuals without the right qualifications or require that they practice under the supervision of another professional. Its use is often justified by concerns about safety. While recognizing that certification considerably reduces consumer ignorance, advocates of licensure contend that it prevents unwary consumers from making unsafe choices. In some cases, however, licensure can prevent consumers from making choices that might make sense for them. Furthermore, it forces consumers to use highly trained, expensive personnel even when viable alternatives may be available.

interest group model of regulation A view of regulations as attempts to further the interests of affected groups, usually producer groups.

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17.4.3 Regulation as a Competitive Strategy Regulations that affect the structure or process of an organization’s opera- tions typically increase its costs and reduce its flexibility. Naturally, firms resist regulation (even if their business plans are consistent with the goals of the regulation). For these reasons, imposing regulations on rivals (but not on oneself) can be an effective competitive strategy. Most regulation of the health professions has been a result of this strategy because existing professionals have been grandfathered in and regulations apply only to newly licensed practitioners.

17.5 Regulatory Imperfections

When markets are not perfect, regulation can improve outcomes. For three reasons, however, regulation is likely to be equally imperfect: the need for decentralized decision making, conflicts between regulatory and financial incentives, and capture by regulated firms. Therefore, although new regula- tions can improve outcomes, this result is not guaranteed.

Regulations work best when decision making is centralized and when “one size fits all.” Healthcare does not fit these criteria. Patients’ healthcare needs, preferences, and circumstances vary considerably, so decision making needs to be decentralized and individualized. In addition, regulatory and financial incentives need to be aligned to work well. When they are not, regu- lations are likely to be ignored or circumvented. For example, we know that healthcare organizations respond to financial incentives. If physicians find that treating patients in the hospital is more convenient than treating them in their offices, and the physicians receive no financial incentives to encour- age outpatient care, utilization review (an analysis of patterns of care by an employer or insurer) is unlikely to reduce hospitalization rates.

Furthermore, the groups being regulated are likely to capture regu- lations even if the regulations were well intended. Capture occurs when a group gains control of the administration of regulations. Capture matters because the way the laws are implemented and enforced is as important as the laws themselves, and sooner or later the groups being regulated are likely to take control of the enforcement process. They have better information than consumers, pay more attention to the regulatory process than consumers, and have a more intense interest in the regulatory process than consum- ers. Regulation does not eliminate consumers’ rational ignorance (although regulations about disclosing information may reduce it). As a result, regula- tors are likely to be members of the regulated group or are likely to rely on members of the regulated group for advice. Compounding this dependence is the regulated group’s ongoing interest in the regulations. Consumers and

capture The takeover of the regulatory process by a special interest.

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their advocates, in contrast, are likely to lose interest once the problems that led to the regulations have eased. Finally, the group being regulated typically has an intense interest in the outcome of the process, and most consumers do not. This disparity further increases the odds of capture because in the political arena, a small group with an intense interest is likely to prevail over a larger group with more diffuse interests. As a result, regulation can best be described as “for the profession” rather than “of the profession.”

Monks, Caskets, and the Supreme Court

The Louisiana State Board of Embalmers and Funeral Directors was formed in 1914 to regulate embalmers, funeral homes, and funeral directors and to handle consumer complaints. The board has one con- sumer representative. The other members all work in funeral homes (Louisiana State Board of Embalmers & Funeral Directors 2018).

Louisiana does not require burials in caskets, nor does it set any standards for caskets. Buying a casket online is perfectly legal. None- theless, Louisiana deemed it a crime to sell “funeral merchandise” without a funeral director’s license (Institute for Justice 2018).

The monks of Louisiana’s Saint Joseph Abbey have to work to sup- port it. After a number of inquiries from consumers, they decided to sell the cypress caskets in which Saint Joseph Abbey has long buried its dead. A funeral director filed a complaint arguing that “illegal third- party casket sales place funeral homes in an unfavorable position with families” (Institute for Justice 2018). The Louisiana State Board of Embalmers & Funeral Directors moved to prevent the monks from sell- ing caskets. To meet the board’s standards, each monk would have to earn 30 hours of college credit and apprentice for a year at a licensed funeral home. None of the skills thus gained would be related to coffin building.

After failing to get the law changed because of opposition from the funeral industry, the abbey sued the board. The abbey won in the dis- trict court in 2011 and in the US Fifth Circuit Court of Appeals in 2013. In its unanimous decision, the Circuit Court said, “The great deference due state economic regulation does not demand judicial blindness to the history of a challenged rule or the context of its adoption nor does

Case 17.1

(continued)

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17.6 Market Responses to Market Imperfections

Market responses to consumer ignorance can limit the need for regulation. Even imperfectly functioning markets incorporate incentives to serve con- sumers well. For most providers, repeat sales and customers are essential, so the incentives to meet customers’ expectations are strong. Even when repeat customers are not major contributors to the business (as with a nursing home or plastic surgeon), the provider’s reputation is one of its most important assets. Customers are not likely to detect profound agency problems. (See chapter 13 for a fuller discussion of asymmetric information and agency.) Aware of their ineptitude for assessing poor performance, they often are willing to pay for information about quality and turn to consumer organiza- tions (e.g., AARP) or information services (e.g., the National Committee for Quality Assurance) to aid them.

it require courts to accept nonsensical explana- tions for regulation” (Institute for Justice 2018). The US Supreme Court rejected a petition for

review, so the Circuit Court’s ruling stands (Institute for Justice 2018).

Discussion Questions • Why were funeral directors so opposed to the monks making

caskets?

• Why would licensing casket makers be a good idea?

• How does licensing casket makers protect the public?

• Does your state license funeral directors?

• In a state that licenses funeral directors, what is the composition of the board?

• Who sits on your state board that regulates pharmacy? Medicine? Dentistry?

• Are members of the profession a majority of the board?

• Is this case an example of regulatory capture?

• Would allowing entry into the casket market reduce prices?

• Are funerals subject to other anticompetitive laws and regulations?

• In medicine, licensure and certification coexist. Is this coexistence present in any other fields?

• How do licensure and certification differ in their protections for ill- informed consumers?

Case 17.1 (continued)

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17.6.1 Tort Law and Contract Law Tort law, which addresses compensation for a broad array of injuries, and contract law, which addresses breaches of agreement, can also remediate the shortcomings of healthcare markets. These legal remedies have powerful advantages. First, the threat of action is often enough to ensure compliance with explicit or implicit norms. If the probability of detecting noncompli- ance is high enough and the penalties are large enough, the threat of legal action will keep firms’ behavior in check. Second, an agent’s financial liability for nonperformance of a treatment usually exceeds the expected costs of the treatment, so tort law and contract law create incentives for providers to perform. Aside from prompting legal costs, fines, and penalties, liability can damage the agent’s reputation. Third, legal liability is outcome oriented. Historically, regulation has focused on whether the structure of care and the processes of care comply with unverified norms, so its utility in matters of law is limited. Fourth, the legal system is more difficult to capture than most regulatory systems, especially when plaintiffs can take their cases to juries. Because consumers can initiate legal action themselves and because some lawyers are willing to accept the financial risks of failed suits by accepting contingency fees, access to legal remedies is more difficult to restrict than access to regulatory remedies.

Despite the power of tort law and contract law, their use also has disadvantages. To begin, legal remedies are costly to apply. Because of the costs of bringing suit, consumers may face barriers when accessing the legal system. Second, consumer ignorance may compromise the effectiveness of legal remedies. If consumers do not realize that their bad outcome resulted from a breach of duty on the part of their provider, they will not bring suit. Alternatively, ignorant consumers may file suits when undesired outcomes resulted from bad luck, not negligence.

Absent a credible threat of being sued, incompetent or unscrupulous providers can continue unchecked. Even worse, the incentive for competent, scrupulous providers to invest resources in improving the quality of care may become diluted.

17.6.2 Information Dissemination The legal system is both powerful and limited. First, it limits physicians to areas in which they are competent, more effectively than state licensing boards do. Medical licenses do not recognize differences in the skills of phy- sicians. Were licenses the only guide, family practitioners would be able to perform neurosurgery. In fear of liability claims, hospitals also limit physicians to specific practices. Physicians, too, restrict their practices.

Second, studies of medical malpractice have shown that the major- ity of consumers who have suffered serious injuries as a result of negligence

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do not sue and receive no compensation. In addition, a high proportion of malpractice suits do not appear to involve provider negligence (Sohn 2013). As a result, the malpractice system does not provide useful information on quality, and malpractice litigation’s effect on the quality of care is not clear. In principle, publication of providers’ malpractice histories should help con- sumers choose. Publication of risk-adjusted outcomes data would be better because it would put pressure on organizations to improve quality and could reduce consumer ignorance.

17.6.3 Contracts Contracts are a private regulatory system (albeit one that does not work when collective mechanisms for enforcing contracts do not function effectively). As with public regulations, contracts work best when financial and regula- tory incentives are aligned. A contract that pays more for better performance will usually produce more satisfactory results than a contract that stipulates minimum performance requirements.

For example, modification of physicians’ practice patterns is a chal- lenge for physician organizations seeking to become medical homes or accountable care organizations. These new organizations need new payment systems to align incentives for physicians (Hilligoss, Song, and McAlearney 2017). These new contracts with physicians may blend capitation, pay for performance, gainsharing, and fee-for-service payment. For example, a pri- mary care physician might receive a base capitation payment, share a bonus if the practice met patient satisfaction targets, and share another bonus if the practice met cost targets. These contracts seek to change practice patterns by aligning the organization’s and physicians’ incentives. Realignment of finan- cial incentives, however, is just part of the necessary modification.

Changing Consumer Information

Physician quality report cards are everywhere: The federal government, consumer groups, profes-

sional organizations, US News and World Report, and ProPublica all produce reports on physicians’ quality of care. However, accurately assessing physician performance is difficult. The measures must be valid and reliable. This assessment requires getting enough appropri- ate data that are risk adjusted. If the data are good, presenting the results in a patient-friendly way can still be challenging.

valid When a measure accurately measures what it is supposed to.

reliable When a measure always gives the same result unless the facts have changed.

Case 17.2

(continued)

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17.7 Conclusion

Markets and regulations complement each other. Well-regulated markets generally work well, and badly regulated markets generally work poorly. The usual reaction of managers is that less regulation is better than more,

The ProPublica Surgeon Scorecard illustrates just how difficult creating a good report card is. ProPublica used inpatient Medicare data for eight

surgeries to rate surgeons. It measured complications as a composite of inpatient mortality and readmission rates. Although this method sounds reasonable, the strategy excluded 82 percent of the cases, missed 84 percent of complications, and was only weakly correlated with generally accepted surgical outcomes, such as the overall death rate, infections, or morbidity (Ban et al. 2016).

Researchers have found little evidence that physician report cards have a significant impact (Shi et al. 2017). In principle, report cards may push out low-quality firms, induce entry by high-quality firms, or encourage existing firms to improve quality, but the evidence is far from compelling. Most studies have found that report cards have mod- est impacts on referrals and market share, probably because referring physicians already steer patients to higher-quality providers.

Discussion Questions • Do patients actually use report cards?

• What evidence can you find that report cards have improved quality?

• How could report cards improve reported outcomes?

• Does the scarcity of scientific evidence on the effectiveness of report cards matter?

• Could publication of performance data be advantageous to physicians?

• How do report cards address information asymmetries?

• Would reducing information asymmetries guarantee better markets?

• Does it matter whether report cards are produced by governments or private organizations?

• Why are a few patient switches enough to influence market outcomes?

Case 17.2 (continued)

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but this view is not always true. For example, in 2003 (18 years after it was established) Medicare Advantage enrolled only 5.3 million beneficiaries, but subsequent changes in its regulations sharply increased its attractiveness, and the number of enrollees more than tripled by 2017 (Jacobson et al. 2017).

Healthcare managers must understand the importance of regulations for their organizations and incorporate the effects of regulations in their decision making. Losses in the legislative or bureaucratic arenas may instigate regulations that put an organization at a significant disadvantage. Although managers may be tempted to see regulations as competitive tools, in prac- tice their value is usually limited in competing with rivals in the same sector. Although zoning laws and certificate-of-need laws are notable exceptions, regulations usually apply the same rules for all the competitors in a sector.

Even when regulations could afford a competitive advantage (perhaps by suppressing competition from rivals from other sectors), few organizations have the political strength and staying power to secure a long-lasting com- petitive advantage through political action. The exceptions tend to be large organizations that have a well-defined goal shared by all members, are well funded, and have a positive reputation. For most organizations the challenge will be to resist the creation of laws and regulations that threaten to put them at a disadvantage. Fortunately, preventing change usually takes much less influence than does causing it.

The interests of healthcare providers appear to require more regulation than governments can be induced to develop. Nongovernmental regulation is widespread in healthcare. For example, certification of health plans and physicians grew out of the need to give customers more detailed information about quality than regulatory bodies could provide. This trend is likely to continue. Managers need to prepare their organizations to compete in envi- ronments in which competitive pressures force the release of detailed, audited information about costs and outcomes. Organizations that do not perform well, and are thus unable to attract well-informed customers, are likely to fail.

Markets need a sound regulatory underpinning to secure property rights, define liability, enforce contracts, and constrain or sanction forms of competition. However, designing effective regulations is not easy. Even well-intentioned regulations can stifle innovation, and regulations do not guarantee improved outcomes.

Exercises

17.1 Why are many consumers apt to be rationally ignorant about their options?

17.2 Why would insurance coverage tend to increase rational ignorance?

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17.3 A proposal has been advanced to limit advertising of pharmaceutical prices to prevent unfair pricing by national chains. You estimate that limits on price advertising will change the price elasticity of demand from −5.63 to −4.43. The marginal cost of a typical prescription is $40. A typical small pharmacy fills 25 prescriptions per day. A typical consumer fills 20 prescriptions per year. What economic effects will the limit have on consumers and on pharmacists? Which group is likely to be the more effective advocate for its position?

17.4 Prices for a medical procedure average $1,000 and range from $800 to $1,200. How much could a consumer paying full price save by getting the best price? Suppose that insurance is responsible for 75 percent of the consumer’s spending and that out-of-pocket spending is limited to $250. How much could the consumer save by getting the best price?

17.5 Why are many economists opposed to licensure of medical facilities and personnel?

17.6 Identify circumstances in which both public and private regulation are present. Which serves consumers better? Why?

17.7 Find out who is on the board of the licensing agency for one of the health professions for your state. Does the board include more members of the profession being regulated or more consumers?

17.8 To reduce the costs of resolving insurance disputes, insurers have required that customers use arbitration. Arbitrators are required to be knowledgeable about medicine and insurance contracts. Why might you anticipate that the arbitration mechanism would wind up favoring the interests of the insurers?

17.9 How might the Food and Drug Administration be subject to capture? Who would be likely to capture the agency?

17.10 Hospital privileges usually restrict what physicians can do. Medical licenses do not. What drives this difference?

17.11 Consumers Union, the Leapfrog Group, and the US Department of Health and Human Services have websites that provide consumer information about hospitals. Why are multiple sources of information available? Which of these sources did you find the most interesting?

17.12 Give an example of a healthcare product that is financed by the government but produced by private firms. Can you explain why this arrangement exists?

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References

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