Healthcare and the Economy: The time of COVID-19 and beyond
Joe Doyle and John Van Reenen
The COVID-19 pandemic has brought home to all of us the close connections between healthcare and the economy. How can the economy be re-built after the strains of the Pandemic.
The Impact of COVID-19 on technology (Anna Valero)
There are many reasons to believe the Pandemic will slow technical change. Demand falls tend to lessen innovation as the market is smaller; uncertainty makes waiting before making sunk technology investments rational; the financial hit means that knowledge investments are more likely to be hit hard and managerial attention is distracted from strategic innovation decisions. On the other hand, the pandemic may force firms to make tough decisions they procrastinated over such as their working arrangements (working from home) and where they locate their core premises (city centres no longer being so attractive). In addition, with all firms experiencing a big shock, coordinating on these new ways of working and investing in the ICT needed to accomplish this are brought forward.
POID researchers have done some of the pioneering work on these issues. Whether it is Bloom's RCT in a Chinese firm or Kretschmer's research on management and flexible working arrangements (worklife balance).
Working with the CBI, we are running firm surveys to look at technological adaption. Initial results suggest that firms actually seem to be innovating more due to the Pandemic, so important questions include (i) what is the mechanism behind this? And (ii) will it last after the pandemic ends? [See: "The business response to Covid-19: The CEP-CBI survey on technology adoption" by Capucine Riom and Anna Valero].
Healthcare Technology (Bronsoler, Doyle and Van Reenen)
Healthcare seems in many ways the ideal place for the adoption of ICT. It is a large and growing sector, information intensive and highly skilled. Because of rapid job growth, there is less fears of automation here than in many other declining sectors of the economy.
Nevertheless, the experience of healthcare IT has not been wonderful. In the UK billions of pounds were sunk in the 2000s in "wiring the NHS" with very disappointing results. Similarly, in the US, the 2009 HITECH Act was meant to cause a sea change in efficiency through better use of ICT such as Electronic Healthcare Records. Despite great expenditure, healthcare costs have continued to rise, so that today almost one dollar in every five is spent on healthcare.
We will have a series of projects looking at the impact of healthcare IT on productivity, clinical quality, jobs and wages. We can use the myriad of government incentives to create some exogenous variation in the adoption of healthcare IT across different hospitals.
Certainly, we suspect that complementary investments in management capabilities are critical in determining whether ICT investment are successful.
"Healthy Business? Managerial Education and Management in Healthcare" (Van Reenen, Bloom, Lemos and Sadun) Review of Economics and Statistics 2(3) 506-517.
"Management in Healthcare: Why Good Practice Really Matters" (Van Reenen, Bloom, Dorgan, Homkes, Layton and Sadun).
Post-COVID-19 Reconstruction (Van Reenen)
A lot of our work has been on helping with ideas on "building back better" after COVID-19. We have ongoing work with many policymakers on these issues.