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The Coase Theorem and patient safety
  1. David Meltzer
  1. Dr David Meltzer, Department of Medicine, Department of Economics, and Graduate School of Public Policy Studies, The University of Chicago, 5841 S Maryland MC 2007, Chicago, IL 60637, USA; dmeltzer{at}medicine.bsd.uchicago.edu

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Coiera and Braithwaite1 suggest a daring new “market-based” strategy to improve patient safety (see page 99). Their cap and trade idea is predicated on the assumption that some level of preventable adverse events in health care is appropriate but that the level of adverse events should be set by balancing the harms produced by the adverse events and the cost of avoiding them. Recognising that the costs of avoiding adverse events may vary across settings, they suggest that a cap and trade system could be used to make healthcare providers (or the systems they work for) pay for the harm resulting from those adverse events through a system in which they must pay for the right to produce (or have produced) those adverse events at a price that would be set by a market based on an agreed upon amount of adverse events for the system as a whole. The attractive aspect of the logic of the system they propose, like the cap and trade system for pollutants, is that those entities best suited to reduce errors at low cost would have incentives to do so, while those entities that find it most costly to reduce errors would not spend an excessive amount of resources attempting to eliminate them. From this perspective, the proposed system would seem to be attractive because it would be expected to produce the agreed upon level of error at the lowest cost.

Unfortunately, regardless of any attraction of the proposal from that perspective, a variety of fundamental challenges arise. First, setting the right level of errors would be exceptionally difficult. Presumably, the …

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