David Dranove, Ph.D.

April 14, 2010

David Dranove, Ph.D., is the Walter McNerney Distinguished Professor of Health Industry Management and director of the Health Enterprise Management Program at the Kellogg School of Management at Northwestern University. His research focuses on competition and consolidation in health care markets, particularly in the hospital sector, and public reporting. He has published extensively in peer-reviewed journals and has authored a number of books, including: The Economics of Strategy; How Hospitals Survived; The Economic Evolution of American Health Care: From Marcus Welby to Managed Care; What’s Your Life Worth?; Kellogg on Strategy; and Code Red.

Dr. Dranove received a Ph.D. in economics, business, and policy from Stanford University, and an M.B.A. in health administration and a B.A. from Cornell University. Prior to joining the faculty at Northwestern University in 1991, Dr. Dranove served as an associate professor at the University of Chicago, Graduate School of Business. He has also consulted on regulatory and antitrust issues for both public and private organizations.

Dr. Dranove’s most recent study used Health Retirement Survey data from 1992–2006 to examine the extent to which measurable dimensions of household wealth for the near elderly fall after an adverse health event and the extent to which the near elderly who lack health insurance suffer disproportionate losses in household wealth. The researchers found that the average household with a newly ill, uninsured, near-elderly individual experiences a decrease in household assets of 30 to 50 percent. Comparable insured near elderly, on the other hand, do not experience a decline in household assets following an adverse health event. Dr. Dranove states, “There are many compelling reasons to cover the uninsured in this country. One of the most compelling may be that millions of Americans are potentially one illness away from financial catastrophe.” View the April 2010 findings brief for more information about this study.

In a prior HCFO study, Dr. Dranove examined whether the willingness-to-pay (WTP) approach—a new model to assess market power and the potential anticompetitive effect of hospital mergers—is a valid analytic method that could be used by courts in health care antitrust analysis. The researchers validated the relationship between WTP and provider prices and measured separately the increase in WTP and prices that result from mergers. The researchers found that the WTP metric is a valid predictor of hospital profits and of changes in hospital profits after mergers. Moreover, defining hospital markets using the WTP measure reveals that traditional methods used for market definition generate overly broad geographic markets. 

Dr. Dranove served as co-principal investigator on a HCFO study with William White, Ph.D., professor at Cornell University, that sought to examine how demand and supply affect prices for inpatient care for privately insured patients in California and Florida from 1990–2003. The researchers found that there was a positive relationship between price and concentration in the 1990s, with a peak occurring in 2001. Following 2001, the relationship ceased or reversed.  The researchers concluded that the effectiveness of selective contracting as a cost-containment tool may have weakened, perhaps due to the widening of provider networks.

For more information about David Dranove and a list of publications, see www.kellogg.northwestern.edu/faculty/bio/Dranove.htm.