Journal of Economic Perspectives: Vol. 22 No. 4 (Fall 2008)


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Organizational Fragmentation and Care Quality in the U.S. Healthcare System

Article Citation

Cebul, Randall D., James B. Rebitzer, Lowell J. Taylor, and Mark E. Votruba. 2008. "Organizational Fragmentation and Care Quality in the U.S. Healthcare System." Journal of Economic Perspectives, 22(4): 93-113.

DOI: 10.1257/jep.22.4.93


Many goods and services can be readily provided through a series of unconnected transactions, but in health care, close coordination over time and within care episodes improves both health outcomes and efficiency. Close coordination is problematic in the U.S. healthcare system because the financing and delivery of care is distributed across a variety of distinct and often competing entities, each with its own objectives, obligations, and capabilities. These fragmented organizational structures lead to disrupted relationships, poor information flows, and misaligned incentives that combine to degrade care quality and increase costs. We illustrate our argument with examples taken from the insurance and hospital industries, and discuss possible responses to the problems resulting from organizational fragmentation.

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Cebul, Randall D. (Case Western Reserve U)
Rebitzer, James B. (Case Western Reserve U and Levy Economics Institute)
Taylor, Lowell J. (Carnegie Mellon U)
Votruba, Mark E. (Case Western Reserve U)

JEL Classifications

H51: National Government Expenditures and Health
H75: State and Local Government: Health, Education, and Welfare
I11: Analysis of Health Care Markets
I18: Health: Government Policy; Regulation; Public Health


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