Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 46: Competence in Health Care - An Industrial Systems Analysis Using Competence Bloc Theory to Compare European and US Health Care

Gunnar Eliasson () and Åsa Eliasson
Additional contact information
Gunnar Eliasson: Royal Institute of Technology, Postal: Infrastructure, SE-100 44 Stockholm, Sweden
Åsa Eliasson: VitiGen AG, Postal: Siebeldingen, Germany

Abstract: While European health care systems are mostly public and similar the contrast is large to the US health industry based to a large extent in the market. Using competence bloc theory the industrial potential of Swedish and European health care is assessed and compared with US health industry. To get the the analysis properly framed health industry is defined to include health insurance, health care and the supporting biotech, pharmaceutical and medical instrument industries. A gradually aging industrialized world makes wealthy customers demand the sophisticated life quality enhancing medical support new technology offers. The overwhelming influence of substitute customership in Europe, through politicians, social insurance, doctors etc., however, holds back development through suppressing the preferences of the true customer (the patient), discouraging innovative product competition and entrepreneurship. The larger part of cost escalation in US health care can be attributed to quality improvements, and luxury health care has stimulated innovative product development. While Swedish health care so far has been a technological winner, commercial competence to become internationally competitive is lacking. It appears politically difficult to recognize that private for profit health care may be both more efficient and profitable than publicly run services. However, once competition for profit has been introduced public providers have to improve performance and the differences will disappear.

Keywords: Health care; Biotechnology; Competence blocs; Experimentally Organized Economy; Entrepreneurship; Industrial Systems analysis; Science Based Industry; Substitute Customers; University Entrepreneurship

JEL-codes: A13; D12; D21; D23; D73; E21; G24; I11; I12; I18; L23; L33; L43; L65; L89

43 pages, May 24, 2004

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