Working Paper: NBER ID: w28709
Authors: Cyrus Aghamolla; Pinar Karacamandic; Xuelin Li; Richard T. Thakor
Abstract: This study examines the link between credit supply and hospital health outcomes. We use bank stress tests as exogenous shocks to credit access for hospitals that have lending relationships with tested banks. We find that affected hospitals shift their operations to increase resource utilization following a negative credit shock but reduce the quality of their care to patients across a variety of measures, including a significant increase in risk-adjusted readmission and mortality rates. The results indicate that access to credit can affect the quality of healthcare hospitals deliver, pointing to important spillover effects of credit market frictions on health outcomes.
Keywords: credit supply; hospital outcomes; healthcare quality; bank stress tests
JEL Codes: G21; G32; I11; I15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Bank stress tests (G28) | Negative credit shock (G51) |
| Negative credit shock (G51) | Increased loan spreads (G21) |
| Negative credit shock (G51) | Decreased loan amounts (G51) |
| Increased loan spreads (G21) | Heightened likelihood of hospital insolvency (G33) |
| Negative credit shock (G51) | Increased resource utilization (O49) |
| Increased resource utilization (O49) | Decline in healthcare quality (I14) |
| Decline in healthcare quality (I14) | Increased risk-adjusted readmission rates (I11) |
| Decline in healthcare quality (I14) | Increased mortality rates (I12) |
| Negative credit shock (G51) | Lower patient satisfaction metrics (I11) |