My research focuses on the provider side of health care. Drawing on insights and approaches from labor economics and industrial organization, I study how providers decide to use new technology. Using administrative data from the Veterans Health Administration, I also study incentives and organization in health care. I also have work investigating how the health care industry affects local health and local economies.
This paper investigates how public health care managers allocate marginal resources under capitated payment and how this affects clinical utilization and outcomes. When U.S. Veterans Affairs hospital systems receive a windfall of funding, they increase spending on direct care cost centers and increase physician and nurse hours. Spending on major overhead cost centers did not increase, nor did spending on the offices of the health care system directors. This is accompanied by an increase in care utilization. A one percent increase in funding leads to a one percent increase in inpatient stays, some of which is driven by an increase in unique patients, and a one percent increase in outpatient visits. The spending increase does not cause a change in rates of death after acute myocardial infarction or rates of hospital readmissions. I find suggestive evidence that VA-Medicare dual-eligible beneficiaries use less Medicare-covered outpatient care in the private sector when their VA region receives a greater funding increase, suggesting that at least some of the increase in VA-provided care is substitution from the other sector, financed by another government program.
Understanding the extent of technological diffusion is important to economics broadly and in the context of health care specifically. I show that new technologies may pose tradeoffs between different dimensions of quality or of productivity. In a Roy model, I show that these tradeoffs can explain why two technologies coexist. The model also serves as a theoretical basis for using an instrumental variable to uncover evidence of tradeoffs. These local average treatment effects can be used in a benefit-cost analysis to assess whether the technology has diffused to an efficient extent. I use a patient's distance to hospitals performing laparoscopic (minimally invasive) surgery, relative to her distance to hospitals performing any surgery at all, as an instrument for whether she undergoes laparoscopic, as opposed to abdominal (open), hysterectomy. In Medicare inpatient claims, I find that laparoscopic surgery causes a shorter length of stay but a greater readmission rate, relative to abdominal hysterectomy, among patients on the margin between the alternatives with respect to this quasi-experiment. This demonstrates laparoscopic surgery's tradeoff, at least among some patient subpopulations. In a back-of-the-envelope benefit-cost analysis, I estimate that laparoscopic surgery may pose a net loss among these marginal cases, suggesting there may be too much laparoscopic surgery in this setting.
This paper investigates substitution that occurs when a wider-scope technology is introduced. Specifically, I study substitution to robotically assisted surgery -- a form of minimally invasive surgery with greater scope of applications than laparoscopic surgery -- in the context of total hysterectomy. Like other new technologies, robotic surgery has high fixed costs, and so only patients with the greatest potential relative potential net benefit from robotic surgery undergo it. The patients who have the most to gain from robotic surgery are those who are not good candidates for laparoscopic surgery -- a limited purpose minimally invasive surgery -- and would undergo open surgery in the absence of the robotic option. In an event study approach using Medicare inpatient data, I find that when a Hospital Referral Region adopts robotic hysterectomy, the percent of hysterectomies performed in an open fashion decreases, and the percent performed laparoscopically remains constant. Regions that adopt robotic surgery experience lesser chances of a long length of stay after a hysterectomy -- a benefit of minimally invasive surgery -- without increased chances of readmissions -- a sign of no increases in surgical complications on average. Even though robotic and laparoscopic hysterectomy are both considered minimally invasive procedures, the data show that robotic and open hysterectomy are in fact closer substitutes.