David Dranove
David Dranove

Walter J. McNerney Professor of Health Industry Management
Professor of Strategy
Chair of Strategy Department

Print Overview

David Dranove is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University's Kellogg School of Management, where he is also Professor of Strategy and Chair of the Department of Strategy.  He was previously Director of the Health Enterprise Management program. He has a PhD in Economics from Stanford University.

Professor Dranove’s research focuses on problems in industrial organization and business strategy with an emphasis on the health care industry.  He has published nearly 100 research articles and book chapters and written five books, including The Economic Evolution of American Healthcare and Code Red. His textbook, The Economics of Strategy, is used by leading business schools around the world.  Professor Dranove regularly consults with leading healthcare organizations in the public and private sector and serves on the Executive Committee and Board  of Directors of the Health Care Cost Institute.  He has also served as an economics expert in several high profile healthcare antitrust cases. 

Areas of Expertise
Healthcare Economics (Biotechnology)
Competition in Healthcare
Competitive Analysis
Data Analysis
Healthcare Economics
Healthcare Management
Industrial Organization Economics
Managed Care Systems
Pharmaceutical Research

Print Vita
PhD, 1983, Economics, Business, Policy, Stanford University
MBA, 1979, Health Administration, Cornell University
BA, 1977, Genetics, Cornell University

Academic Positions
Walter McNerney Distinguished Professor of Health Industry Management, Kellogg School of Management, Northwestern University, 2000-present
Professor, Kellogg School of Management, Northwestern University, 1995-present
Director, Kellogg School of Management, Northwestern University-present
Department Chair, Kellogg School of Management, Northwestern University, 1996-2000
Richard Paget Distinguished Professor of Management and Strategy, Kellogg School of Management, Northwestern University, 1995-2000
Associate Professor, Kellogg School of Management, Northwestern University, 1991-1995
Co-Director, Graduate School of Business, University of Chicago, 1990-1991
Associate Professor of Business Economics, Graduate School of Business, University of Chicago, 1987-1991
Assistant Professor of Business Economics, Graduate School of Business, University of Chicago, 1983-1987

Grants and Awards
Finalist: Economist of the Year, Global Competition Review
Workshop on Health IT Best Paper Award 2012, Center for Health Information and Decision Systems
Sidney J. Levy Teaching Award, Kellogg School of Management, 2008-2009, 2004-2005, 2001-2002
Stanley Reiter Best Paper Award (Co-Winner), Kellogg School of Management, 2005

Editorial Positions
Editor, International Journal of Health Economics and Management, 2014-Present
Editor in Chief, Health Management, Policy and Innovation, 2012-2014
Associate Editor, RAND Journal of Economics, 2000-Present
Associate Editor, Health Services Research, 2002-2008
Associate Editor, Journal of Health Economics, 1990-2008
Associate Editor, Management Science, 1999-2004
Associate Editor, RAND Journal of Economics
Ad-hoc Reviewer, American Economic Review
Ad-hoc Reviewer, Journal of Health Economics
Ad-hoc Reviewer, Journal of Economic Literature

Print Research
Research Interests
Industrial organization and the economics of information, business strategy, medical economics, health services policy analysis

Dranove, DavidCraig Garthwaite and Christopher Ody. Forthcoming. The Effect of the 2008 Economic Slowdown on Health Spending. Health Affairs. Forthcoming
Dranove, DavidShane Greenstein, Avi Goldfarb and Chris Forman. Forthcoming. The Trillion Dollar Conundrum: Complementarities and Health Information Technology. American Economic Journal: Policy.
Lu, Susan Feng and David Dranove. Forthcoming. Profiting from Gaizhi: Management Buyouts during China's Privatization. Journal of Comparative Economics.
Dranove, David, Subramaniam Ramanarayanan and Yasutora Watanabe. 2012. Delivering Bad News: Market Responses to Obstetricians' Negligence. Journal of Law and Economics. 55(1): 1-25.
Dafny, Leemore SDavid DranoveFrank Limbrock and FionaScott Morton. 2011. Data Impediments to Empirical Work on Health Insurance Markets. B.E. Journal of Economic Analysis & Policy. 11(2): Article 8.
Dranove, David, Subramaniam Ramanarayanan and Andrew Sfekas. 2011. Does the Market Punish Aggressive Experts? Evidence from Cesarean Sections. B.E. Journal of Economic Analysis & Policy.
Dranove, David and Ginger Jin. 2010. Quality Disclosure and Certification: Theory and Practice. Journal of Economic Literature. 48(4)
Dranove, David, Cory Capps and Leemore S Dafny. 2010. A Competitive Process for Procuring Health Services: A Review of Principles with an Application to Cataract Services. SPP Research Paper: The Health Series. The School of Public Policy, University of Calgary 2(5)
Dranove, David, Cory Capps and Richard Lindrooth. 2010. Hospital Closure and Economic Efficiency. Journal of Health and Economics. 29(1): 87-109.
Cook, Keziah, David Dranove and Andrew Sfekas. 2010. Does Major Illness Cause Financial Catastrophe?. Health Services Research. 45(2)
Dranove, David. 2010. Viewing Healthcare Consolidation Through the Lens of Economics and Strategy. Robert Wood Johnson Foundation Changes in Healthcare Finanacing and Organization Report.
Dranove, David and Andrew Sfekas. Forthcoming. The Plan to “Stabilize and Strengthen” New York’s Health Care System: An Antitrust Perspective. Milbank Quarterly. 87(3)
Dranove, David and Yasutora Watanabe. 2009. Influence and Deterrence: How Obstetricians Respond to Litigation against Themselves and their Colleagues. American Law and Economics Review. 12(1): 69-94.
Dafny, Leemore S and David Dranove. 2009. Regulatory Exploitation and Management Changes: Upcoding in the Hospital Industry. Journal of Law and Economics. 52(2): 223-250.
Dranove, David and Andrew Sfekas. 2009. The Revolution in Healthcare Antitrust: New Methods and Provocative Implications. Milbank Quarterly. 87(3)
Dranove, David, Cory Capps and Sayaka Nakamura. Forthcoming. Hospital Vertical Integration and Patient Referrals. Journal of Economics and Management Strategy.
Dafny, Leemore S and David Dranove. 2008. Do Report Cards Tell Consumers Anything They Don't Already Know? The Case of Medicare HMOs. RAND Journal of Economics. 39(3): 790-821.
Dranove, David, Richard C. Lindrooth, William D. White and Jack Zwanziger. 2008. Is the Impact of Managed Care on Hospital Prices Decreasing?. Journal of Health Economics. 27(2): 362-376.
Dranove, David and Andrew Sfekas. 2008. Start Spreading the News: A Structural Estimate of the Effects of New York Hospital Report Cards. Journal of Health Economics.
Nakamura, Sayaka, Cory Capps and David Dranove. 2007. Patient Admission Patterns and Acquisitions of Feeder Hospitals. Journal of Economics & Management Strategy. 16(4): 995-1030.
Ciliberto, Federico and David Dranove. 2006. The Effect of Physician-Hospital Affiliations on Hospital Prices in California. Journal of Health Economics. 25(1): 29-38.
Dranove, David and Michael Millenson. 2006. Medical Bankruptcy: Myth versus Fact. Health Affairs. 25(2): 74-83.
Dranove, David and Anne Gron. 2005. Effects of the Malpractice Crisis on Access and Incidence: Evidence from Florida. Health Affairs. 24(3): 802-810.
Capps, Cory and David Dranove. 2004. Hospital Consolidation and Negotiated PPO Prices. Health Affairs. 23(2): 175-181.
Dranove, David, Daniel Kessler, Mark McClellan and Mark Satterthwaite. 2003. Is More Information Better? The Effects of Report Cards on Health Care Providers. Journal of Political Economy. 111(3): 555-588.
Dranove, David and Richard C. Lindrooth. 2003. Hospital Consolidation and Costs: Another Look at the Evidence. Journal of Health Economics. 22(6): 983-997.
Dranove, DavidEdward FX Hughes and Mark Shanley. 2003. Determinants of HMO Formulary Adoption Decisions. Health Services Research. 38(1): 169-190.
Dranove, David, Anne Gron and Michael Mazzeo. 2003. Differentiation and Competition in HMO Markets. Journal of Industrial Economics. 51(4): 433-454.
Dranove, David and Neil Gandal. 2003. The DVD vs. DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects. Journal of Economics & Management Strategy. 12(3): 363-386.
Dranove, David and Kathryn E. Spier. 2003. A Theory of Utilization Review. Contributions to Economic Analysis & Policy. 2(1): 1146.
Capps, Cory, David Dranove and Mark Satterthwaite. 2003. Competition and Market Power in Option Demand Markets. RAND Journal of Economics. 34(4): 737-763.
Capps, Cory, David DranoveShane Greenstein and Mark Satterthwaite. 2002. Antitrust Policy and Hospital Mergers: Recommendations for a New Approach. Antitrust Bulletin. 47(4): 677-704.
Dranove, David, Carol Simon and William D. White. 2002. Is Managed Care Leading to Consolidation in Healthcare Markets?. Health Services Research. 37(3): 573-594.
Besanko, DavidDavid Dranove and Mark Shanley. 2001. Exploiting a Cost Advantage and Coping with a Cost Disadvantage. Management Science. 47(2): 221-235.
Baker, Loren, David Dranove and Kathryn E. Spier. 2000. Competition Among Employers Offering Health Insurance. Journal of Health Economics. 19(1): 121-140.
Shortell, Stephen M., Robert H. Jones, Alfred W. Rademaker, Robin R. Gillies, David DranoveEdward FX Hughes, Peter Budetti, Katherine S.E. Reynolds and Cheng-Fang Huang. 2000. Assessing the Impact of Total Quality Management and Organizational Culture on Mulitple Outcomes of Care for Coronary Artery Bypass Graft Surgery Patients. Medical Care. 38(2): 207-217.
Dranove, David, Robin R. Gillies, Stephen M. Shortell, Alfred W. Rademaker and Cheng-Fang Huang. 1999. The Cost of Efforts to Improve Quality. Medical Care. 37(10): 1084-1087.
Dranove, David and Richard Ludwick. 1999. Competition and Pricing by Nonprofit Hospitals: A Reassessment of Lynk's Analysis. Journal of Health Economics. 18(1): 87-98.
Dranove, David, Carol Simon and William D. White. 1998. The Determinants of Managed Care Penetration. Journal of Health Economics. 17(6): 729-745.
Dranove, David and Mark Shanley. 1998. Do Strategic Groups Exist: An Economic Framework for Analysis. Strategic Management Journal. 19(11): 1029-1044.
Dranove, David and William D. White. 1998. Medicaid-Dependent Hospitals and Their Patients: How Have They Fared?. Health Services Research. 33(2): 163-185.
Simon, Carol, David Dranove and William D. White. 1998. The Effect of Managed Care on the Income of Primary Care and Specialty Physicians: A State Level Analysis. Health Services Research. 33(3): 549-569.
Dranove, David. 1998. Is There Underinvestment in R&D About Prevention?. Journal of Health Economics. 17(1): 117-127.
Dranove, David. 1998. Economics of Scale in Non-revenue producing Cost Centers: Implications for Hospital Mergers. Journal of Health Economics. 17(1): 69-83.
Dranove, David and William D. White. 1998. Emerging Issues in the Antitrust Definition of Healthcare Markets. Health Economics Letter. 7(2): 167-170.
Simon, Carol, David Dranove and William D. White. 1997. The Impact of Managed Care on the Physician Marketplace. Public Health Reports. 112(3): 222-230.
Dranove, David and William D. White. 1996. Specialization, Option Demand, and the Pricing of Medical Specialists. Journal of Economics and Management Strategy. 5(2): 277-306.
Dranove, David and Mark Shanley. 1996. Are Multihospital Systems More Efficient?. Health Affairs. 15(1): 100-103.
Ward, Michael R., David Dranove and Michael R. Ward. 1995. The Vertical Chain of Research and Development in the Pharmaceutical Industry. Economic Inquiry. 33(1): 70-87.
Dranove, David and Mark Shanley. 1995. Cost Reductions or Reputation Enhancements as Motives for Mergers: The Logic of Multihospital Systems. Strategic Management Journal. 33(1): 55-74.
Dranove, David. 1994. Physician-Induced Demand for Childbirths. Journal of Health Economics. 13(1): 61-73.
Dranove, David and William D. White. 1994. Doing a Number on Doctors. American Enterprise Magazine. 5(4): 44-53.
Dranove, David. 1994. Can Competition Cut the Mustard?. Health Management Quarterly: HMQ. 16(2): 7-10.
Dranove, David. 1994. Local Multi-hospital Systems will be Critical to the Success of Teaching and Community Hospitals. Compendium of Hospital Economics Newsletter.
Dranove, David. 1995. A Problem with Consumer Surplus Measures of the Cost of Practice Variations. Journal of Health Economics. 14(2): 243-251.
Dranove, David. 1994. Do Important Drugs Reach the Market Sooner?. RAND Journal of Economics. 25(3): 402-423.
Dranove, David. 1994. The Economic Side Effects of Dangerous Drug Announcements. Journal of Law and Economics. 37(2): 323-348.
Dranove, David and William D. White. 1994. Recent Theory and Evidence on Competition in Hospital Markets. Journal of Economics and Management Strategy. 3(1): 169-209.
Dranove, David and William D. White. 1993. The Changing Nature of Competition in Health Care. Journal of Medical Practice Management. 8
Dranove, David, Mark Shanley and William D. White. 1993. Price and Concentration in Hospital Markets: The Switch from Patient-Driven to Payer-Driven Competition. Journal of Law and Economics. 36(1): 179-204.
Dranove, David and William D. White. 1993. Segmentation in Local Hospital Markets. Medical Care. 31(1): 52-64.
Dranove, David and Mark Satterthwaite. 1992. Monopolistic Competition when Price and Quality are not Perfectly Observable. RAND Journal of Economics. 23(4): 518-534.
Dranove, David, Mark Shanley and Carol Simon. 1992. Is Hospital Competition Wasteful?. RAND Journal of Economics. 23(2): 247-262.
Dranove, David. 1991. The Costs of Compliance with the 1962 FDA Amendments--Editorial. Journal of Health Economics. 10(2): 235-238.
Dranove, David, Mark Shanley and William D. White. 1991. How Fast are Hospital Prices Really Rising?. Medical Care. 29(8): 690-696.
Dranove, David. 1990. Information Spillovers, Incumbency, and Conservatism. International Journal of Industrial Organization. 8(4): 575-585.
Dranove, David and Mark Shanley. 1990. A Note on the Relational Aspects of Hospital Market Definitions. Journal of Health Economics. 8(4): 473-478.
Dranove, David. 1989. Antitrust Challenges to Hospital Mergers. Health Lawyer.
Dranove, David. 1989. Medicaid Drug Formulary Restrictions. Journal of Law and Economics. 32(1): 143-162.
Dranove, David and William D. White. 1989. Agency Theory: Offering New Insights into the Health Care Industry. Journal of Medical Practice Management. 4(3): 165-169.
Dranove, David. 1988. Pricing by Non-Profit Institutions: The Case of Hospital Cost Shifting. Journal of Health Economics. 7(1): 47-57.
Dranove, David. 1988. Demand Inducement and the Physician/Patient Relationship. Economic Inquiry. 26(2): 281-298.
Dranove, David and William D. White. 1987. Agency and the Organization of Health Care Delivery. Inquiry. 24(4): 405-415.
Dranove, David. 1987. Rate Setting by Diagnosis Related Groups and Hospital Specialization. RAND Journal of Economics. 18(3): 417-427.
Dranove, David. 1986. Why Did States Enact Hospital Rate Settings Laws?. Journal of Law and Economics. 29(2): 287-302.
Dranove, DavidMark Satterthwaite and Jody Sindelar. 1986. Preferred Provider Organization: Injecting Price Competition into the Hospital Market. Inquiry. 23(4): 419-431.
Dranove, David. 1985. Do state rate setting regulations really lower hospital expenses?. Journal of Health Economics. 4(2): 159-165.
Dranove, David. 1985. An Empirical Study of a Hospital-based Home Nursing Care Program. Inquiry. 22(1): 59-66.
Dranove, David. 1984. A Comment on "Does Practice Make Perfect?". Medical Care. 22(10): 967-969.
Working Papers
Dranove, DavidMark Satterthwaite and Christopher Ody. Do Bargainers Show Foresight? Evidence from Hospital/Insurer Bargaining.
Dranove, David and Frank Limbrock. The Impact of Massachusetts Health Reform on Access to Tertiary Hospitals.
Dranove, DavidCraig Garthwaite and Christopher Ody. How do Hospitals Respond to Negative Profit Shocks? The Impact of the 2008 Stock Market Crash.
Garthwaite, CraigDavid Dranove and Christopher Ody. How Do Hospitals Respond to Negative Financial Shocks? The Impact of the 2008 Stock Market Crash.
Capps, Cory, David Dranove and Richard C. Lindrooth. 2008. Hospital Bailouts and Economic Efficiency.
Book Chapters
Dranove, David and Cory Capps. Forthcoming. "Healthcare Antitrust." In The Handbook of Antitrust Economics.
Dranove, David. Forthcoming. "Healthcare Markets, Regulators, and Certifiers." In The Handbook of Health Economics.
Dranove, David and H Gravele. Forthcoming. "Markets, Contracts, and Information Disclosure.".
Dranove, David, S. Gardino and Andrew Sfekas. 2010. "Anticipating Ovarian Tissue Cryopreservation in the Health-Care Marketplace: A Willingness to Pay Approach." In Oncofertility, edited by T. Woodruff, New York: Springer.
Boni-Saenz, Alex, Anthony T.Lo Sasso, Linda Emanuel and David Dranove. 2005. "The Price of Palliative Care: Toward a Complete Accounting of Costs and Benefits." In Clinics in Geriatric Medicine: Palliative Care II, edited by Linda Emanuel, vol. 21, Elsevier.
Dranove, David. 2002. "What Impact Did the Programs Have on the Costs of Care for Ventilator Assisted Children." In Pediatric Home Care: Results of a National Evaluation of Programs for Ventilator Assisted Children, edited by Lu Ann Aday, Marlene J. Aitken, Donna Hope Wegener, 295-. University of Michigan: Pluribus Press.
Dranove, David and Mark Satterthwaite. 2000. "The Industrial Organization of Health Care Markets." In Handbook of Health Economics, edited by A.J. Culyer, J.P. Newhouse, vol. 1B, 1093-1140. Elsevier.
Gillies, Robin R., Katherine S.E. Reynolds, Stephen M. Shortell, Edward FX Hughes, Peter Budetti, Alfred W. Rademaker, Cheng-Fang Huang and David Dranove. 2000. "Implementing Continuous Quality Improvement." In The Quality Imperative: Measurement and Management of Quality in Healthcare, edited by John R. Kimberly and Etienne Minvielle, 79-102. London, UK: Imperial College Press.
Born, Patricia, David Dranove, Carol Simon and William D. White. 1998. "Managed Care and the Physician Marketplace." In Managed Care and Changing Health Care Markets, edited by Michael A. Morrisey, Washington: American Enterprise Institute.
Dranove, David. 1995. "Measuring Costs." In Valuing Health Care: Costs, Benefits, and Effectiveness of Pharmaceuticals and Other Medical Techn, edited by Frank A. Sloan, 61-76. Cambridge University Press.
Dranove, David. 1993. "The Five W's of Utilization Review." In American Health Policy: Critical Issues for Reform, edited by Robert B. Helms, 239-255. American Enterprise Institute.
Dranove, David. 1993. "The Case for Competition." In Competitive Approaches to Health Care Reform, edited by Richard J. Arnould, Robert F. Rich and William D. White, Urban Institute Press.
Dranove, David and Mark Satterthwaite. 1991. "The Implications of Resource-Based Relative Value scales for Physicians' Fees, Incomes, and Specialty Choices." In Regulating Doctors' Fees: Competition, Benefits, and Controls Under Medicare, edited by H. E. Frech, American Enterprise Institute.
Capps, Cory, David DranoveShane Greenstein and Mark Satterthwaite. "Geographic Market Definition in Hospital Merger Cases." Testimony for the Federal Trade Commission and Department of Justice Hearings on Health Care and Competition Law and Policy, April.
Dranove, David and William D. White. "Clinton's Specialist Quota: Shaky Premises, Questionable Consequences.".
Dranove, David. ""Code Red" blog.".
Besanko, DavidDavid Dranove, Mark Shanley and Scott Schaefer. 2012. Economics of Strategy. Wiley, 6.
Dranove, DavidDavid Besanko, Scott Schaefer and Mark Shanley. 2014. Economics of Strategy, Sixth Edition.
Dranove, David. 2012. Practical Regression.
Dranove, David. 2008. Code Red. Princeton University Press.
Dranove, David and Sonia Marciano. 2005. Kellogg on Strategy. New York, NY: Wiley.
Dranove, David. 2003. What's Your Life Worth?. New York, NY: Financial Times/Prentice Hall.
Dranove, David. 2001. The Economic Evolution of American Health Care. Princeton, NJ: Princeton University Press.
Dranove, David. 2012. Practical Regression: Time Series and Autocorrelation. Case 7-112-012 (KEL646).
Dranove, David. 2012. Practical Regression: Introduction to Endogeneity: Omitted Variable Bias. Case 7-112-004 (KEL638).
Dranove, David. 2012. Practical Regression: Convincing Empirical Research in Ten Steps. Case 7-112-001 (KEL635).
Dranove, David. 2012. Practical Regression: Causality and Instrumental Variables. Case 7-112-010 (KEL644).
Dranove, David. 2012. Practical Regression: From "Stylized Facts" to Benchmarking . Case 7-112-011 (KEL645).
Dranove, David. 2012. Practical Regression: Noise, Heteroskedasticity, and Grouped Data. Case 7-112-006 (KEL640).
Dranove, David. 2012. Practical Regression: Regression Basics. Case 7-112-002 (KEL636).
Dranove, David. 2012. Practical Regression: Fixed Effects Models. Case 7-112-005 (KEL639).
Dranove, David. 2012. Practical Regression: Maximum Likelihood Estimation. Case 7-112-008 (KEL642).
Dranove, David. 2012. Practical Regression: Log vs. Linear Specification. Case 7-112-007 (KEL641).
Dranove, David. 2012. Practical Regression: Discrete Dependent Variables. Case 7-112-009 (KEL643).
Dranove, David. 2012. Practical Regression: Building Your Model: What Variables to Include. Case 7-112-003 (KEL637).

Print Teaching
Full-Time / Part-Time MBA
Business Analytics II (DECS-431-0)
This sequel to DECS-430 extends the statistical techniques learned in that course to allow for the exploration of relationships between variables, primarily through multivariate regression. In addition to learning basic regression skills, including modeling and estimation, students will deepen their understanding of hypothesis testing and how to make inferences and predictions from data. Students will also learn new principles such as identification and robustness. The course has an intense focus on managerially relevant applications, cases and interpretations.

Health Economics (MGMT-444-0)

This course counts toward the following majors: Health Enterprise Management, Health Industry Management, Management & Strategy, Managerial Economics.

This course examines the application of economic concepts to management problems and policy issues of the health sector. Topics covered include measuring the benefits of healthcare, the role of insurance in spreading risk and altering incentives, the production of healthcare, price and nonprice competition among providers, and proposed policies that are intended to contain costs. This course helps complete a major in Management and Strategy or Managerial Economics as well as HEMA.

Analytics for Strategy (MGMT-469-0)

This course counts toward the following majors: Decision Sciences, Health Enterprise Management, Managerial Analytics, Management & Strategy.

Most strategic decisions businesses make require an assessment of cause and effect. What will happen to prices and sales if I open a new location in a particular geographic area? How will consumers respond if I begin posting the caloric content of my food products at the point of purchase? What is the effect of seasonal bonuses on employee productivity? This course is a deep dive into the empirical tool that is most valuable for linking cause to effect: regression analysis. You will learn how to perform convincing data analyses to answer specific questions, how to evaluate analyses others have done, and how to present data analysis in a clear and accessible way.

Students who took DECS 434 prior to the launch of DECS 431 (Fall 2013) must have permission of the instructor to enroll.