Working Paper: NBER ID: w19490
Authors: John A. Romley; Neeraj Sood
Abstract: Estimates of the returns to medical care may reflect not only the efficacy of more intensive care, but also unmeasured differences in patient severity or the productivity of health-care providers. We use a variety of instruments that are plausibly orthogonal to heterogeneity among providers as well as patients to analyze the intensity of care and 30-day survival among Medicare patients hospitalized for heart attack, congestive heart failure and pneumonia. We find that the intensity of care is endogenous for two out of three conditions. The elasticity of 30-day mortality with respect to care intensity increases in magnitude from -0.27 to -0.71 for pneumonia and from -0.16 to -0.33 for congestive heart failure, when we address the identification problem. This finding is consistent with the hypotheses that care intensity at hospitals tends to decrease with hospital productivity, or increase with unmeasured patient severity.
Keywords: health production function; hospital care; medical spending; 30-day survival; Medicare patients
JEL Codes: D24; I1; I12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Care intensity decreases with hospital productivity (D24) | Care intensity (I11) |
| Care intensity increases with unmeasured patient severity (I12) | Care intensity (I11) |
| Intensity of hospital care (I11) | 30-day survival rates for Medicare patients (I18) |
| Care intensity (I11) | Survival outcomes (C41) |
| Care intensity (pneumonia) (I11) | Mortality (I12) |
| Care intensity (congestive heart failure) (I11) | Mortality (I12) |