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Orszag: Are hospitals more efficient than they seem?

Bloomberg, October 8, 2013
Hospitals have been criticized, including by me, as wildly inefficient. Yet two new pieces of evidence suggest that the hospital market may be more efficient than conventional wisdom suggests. Hospitals practice medicine in drastically different ways, and the higher-spending ones don't seem to generate any better results than those that spend less. Because of third-party insurance and other distortions, though, the market doesn't punish the inefficient hospitals. That has been the traditional critique. A new study suggests, however, that hospitals actually do gain patients when they provide better value.