Sunday, July 15, 2018

Kidney exchange is fragmented in the U.S.

Market Failure in Kidney Exchange

Nikhil AgarwalItai AshlagiEduardo AzevedoClayton R. FeatherstoneÖmer Karaduman

NBER Working Paper No. 24775
Issued in June 2018

Abstract: "We show that kidney exchange markets suffer from traditional market failures that can be fixed to increase transplants by 25%-55%. First, we document that the market is fragmented and inefficient: most transplants are arranged by hospitals instead of national platforms. Second, we propose a model to show two sources of inefficiency: hospitals do not internalize their patients’ benefits from exchange, and current mechanisms sub-optimally reward hospitals for submitting patients and donors. Third, we estimate a production function and show that individual hospitals operate below efficient scale. Eliminating this inefficiency requires a combined approach using new mechanisms and solving agency problems."

Here's a key sentence:
"The three largest multi-hospital platforms together only account for a minority share of the kidney exchange market. 62% of kidney exchange transplants are within hospital transplants that are not facilitated by the NKR, APD or UNOS. Moreover, over 100 hospitals performed kidney exchanges outside these three platforms during this period."

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