Health Policy and High-Tech Industrial Development
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Health Policy and High-Tech Industrial Development

Learning from Innovation in the Health Industry

Edited by Marco R. Di Tommaso and Stuart O. Schweitzer

By weaving together the fields of health economics, industrial organisation and industrial development, this book describes the benefits of promoting a country’s health industry as a way of stimulating its high-technology industrial capacity. The authors illustrate that the development of a country’s health industry not only improves the country’s health status, but also promotes an industry with relatively stable, high-wage employment, creates the potential for exporting goods and services, and produces scientific spillovers that will favourably impact other high-technology industries.
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Chapter 7: Benchmarking Hospital Costs in the UK: Increasing Efficiency and Driving Innovation in the Healthcare Industry?

Sue Llewellyn and Deryl Northcott


7. Benchmarking hospital costs in the UK: increasing efficiency and driving innovation in a health care industry?* Sue Llewellyn and Deryl Northcott INTRODUCTION A Health Industry Model (HIM) recognizes the broad contribution that health care can make to national economic development. Yet, wherever and whenever health care is publicly financed, a key government policy objective is achieving technological development and innovation within resource constraints. Governments have employed a variety of mechanisms to achieve this aim. In the UK, for example, since the 1980s, health care management policy has undergone several reforms, from general management to resource management and the internal market through to, latterly, the ‘New Labour’ government’s modernization programme. Several authors have charted the history of these developments (see, for example, Bourn and Ezzamel, 1986a; Broadbent et al., 1991; Broadbent, 1992; Preston et al., 1992; Harrison and Pollitt, 1994; Hood, 1995; Jones and Dewing, 1997; Jones, 1999; Llewellyn, 1998; Keen, 1999; Klein, 1999). In conjunction with these broader financial management agenda, a succession of costing initiatives have changed the way in which cost information is compiled, reported and used for control purposes in UK hospitals. Costing was reconfigured to support general management through devolved budgets, resource management through clinical budgeting and the internal market through setting prices equal to cost for contracting and commissioning (see Bourn and Ezzamel, 1986b; Bates and Brignall, 1993; King et al., 1994; Ellwood, 1996a, 1996b, 2000; Jones, 1999). However, until the advent of ‘modernization’ and relative performance evaluation in UK health care,...

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