Key subjects: entry barriers; competition; incumbent advantage; certificate-of-need; dialysis; access-to-care
Abstract: How do entry barriers in provider markets affect market structure and welfare? In the US, certificate-of-need (CON) programs statutorily prohibit capacity investment when a health planner determines that a community’s “needs” are already being met. I examine CON programs’ effects in the dialysis industry, where patients are sensitive to treatment access and quality. I find that they reduce entry and protect incumbents from potential competition while enabling them to expand. I use variation from two natural experiments and a structural model of patient preferences to find that marginal entrants improve access and the patient-treatment match, lower congestion, and raise monthly countywide patient welfare by an amount equal to reducing travel by 9,254 miles.
R&R: American Economic Journal: Economic Policy
Key subjects: provider-induced demand; gaming; consolidation; hospice; Medicare; policy; non-linear program design; health care utilization
Abstract: Capping health care providers' average revenue can reduce allocative inefficiency under capitation. But its potential cost-savings may be undercut by health care providers who churn their patient censuses. We investigate this possibility in the U.S. hospice industry, where Medicare pays hospice programs fixed daily rates but caps their average annual revenue. By leveraging variation generated by the cap's nonlinear design and the transition between fiscal years, we find that programs on track to exceed the cap raise enrollment rates by 5.8% and live discharge rates by 4.3% in the fourth quarter, reducing financial penalties—but far from eliminating them. Marginal enrollees have longer average remaining lifetimes and more fragmented hospice spells, suggesting weaker intrinsic demand for hospice care. We discuss the cap's implications for market structure.
This was circulated as NBER Working Paper 31691.
Conditionally accepted at the Journal of Public Economics.
Key subjects: market segmentation; hospice; referral networks; Alzheimer's disease and related dementia
Abstract: How do referral networks and medical conditions determine where patients get care? We study this question in the U.S. hospice industry, where for-profit hospice programs enroll more long-term care patients and more patients with Alzheimer’s disease and related dementia. We find that for-profit hospice enrollees have 23% longer lifetime lengths-of-stay in hospice care than not for-profit hospice enrollees with the same medical conditions, institutional referral source, state of residence, and enrollment year. This and other differences in their end-of-life health care utilization suggest that hospice market segmentation is the result of a patient-specific selection mechanism that is partially independent of institutional barriers to hospice care.
Published at Health Affairs Scholar: https://doi.org/10.1093/haschl/qxae160
Key subjects: nursing homes; health care infrastructure investment; financial markets; health policy
Abstract: Many nursing homes require significant modernization to enhance resident quality of life, yet access to capital remains a critical barrier, especially for those dependent on Medicaid funding. The HUD 232-sponsored loan program helps insure low-interest financing to nursing homes, but its impact on capital accessibility and quality improvement remains unclear. This study examines nursing home characteristics associated with receiving HUD 232-sponsored loans. We find that nursing homes with higher operating margins, higher proportions of Medicare residents, and in rural locations were significantly more likely to receive HUD 232-sponsored loans. In contrast, not-for-profits were underrepresented among loan recipients. There was no significant association between quality measures, such as overall star ratings and health deficiencies, and loan uptake. The findings suggest that although the HUD 232-sponsored loan program improves access to capital for financially stable nursing homes, it may exclude others in need of funding, such as not-for-profits and nursing homes serving fewer Medicare residents. Policymakers should consider reforms to better align the program with its goal of supporting modernization across the entire nursing home sector, particularly for those facilities that are financially disadvantaged.
[under review]
Key subjects: econometric theory; difference-in-differences; event study; multiple events; matching
Abstract: An event study is an empirical framework for measuring the impact of an event over time using observational data. Under no anticipation and parallel trends assumptions, difference-in-differences are known to identify the event's average treatment effect on the treated when units experience one event at most. In this paper, I introduce a new event study framework to accommodate settings where units may experience multiple events. I introduce a matching estimator which consistently and transparently estimates the average treatment effect on the treated of a single event under generalizations of the conventional no anticipation and parallel trends assumptions. I show that the matching estimator is equivalent to a weighted least squares estimator for a particular set of weights. I also introduce a parallel pre-trends test which can be used to scrutinize these assumptions in the usual sense. Finally, I demonstrate in a series of Monte Carlo simulations that the estimator and parallel pre-trends test work well for a wide range of treatment effects, including dynamic, non-stationary, and history-dependent treatment effects.