The Effect of Regulation on Innovation in Healthcare Delivery

Abstract

There is much debate around the effect laws and regulations have on innovation. One school of thought says that regulation generally stifles innovation by forcing entrepreneurs and prospective innovators to deal with rising compliance costs and excessive bureaucracy.1 Others argue that regulation incentivizes innovation by creating a “moving target” that drives businesses to constantly improve the way they deliver services in order to keep up with evolving benchmarks for quality and maintain an edge on potential competitors.1 A 2013 article published on the Forbes Magazine blog suggests that one way to judge whether a law or regulation will help or hinder innovation is to look at its intent.2 According to the author, laws have a positive effect on innovation when they evolve with the time, creating an environment that encourages businesses to utilize and develop new business models that more effectively cater to the needs of consumers.2 Conversely, regulations that primarily serve to preserve the status-quo or protect existing business models limit the power of innovation.2