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Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home

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  • Joseph J. Doyle
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    Abstract

    Health care spending varies widely across markets, and previous research finds little evidence that higher spending translates into better health outcomes. The main innovation in this paper exploits this cross-sectional variation in hospital spending in a new way by considering emergency patients who are exposed to healthcare systems when they are far from home. Visitors to Florida who become ill in high-spending areas have significantly lower mortality rates compared to visitors in lower spending areas. The results are robust within groups of similar visitors and within groups of destinations that appear to be close demand substitutes -- areas that likely attract similar visitors. (JEL H75, I11, I18)

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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

    Volume (Year): 3 (2011)
    Issue (Month): 3 (July)
    Pages: 221-43

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    Handle: RePEc:aea:aejapp:v:3:y:2011:i:3:p:221-43

    Note: DOI: 10.1257/app.3.3.221
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    1. Cutler, David, 2007. "The Lifetime Costs and Benefits of Medical Technology," Scholarly Articles 2643640, Harvard University Department of Economics.
    2. Gowrisankaran, Gautam & Town, Robert J., 1999. "Estimating the quality of care in hospitals using instrumental variables," Journal of Health Economics, Elsevier, vol. 18(6), pages 747-767, December.
    3. Cutler, David M., 2007. "The lifetime costs and benefits of medical technology," Journal of Health Economics, Elsevier, vol. 26(6), pages 1081-1100, December.
    4. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, vol. 115, pages 103-140.
    5. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1998. "Are Medical Prices Declining? Evidence From Heart Attack Treatments," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 991-1024, November.
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    Cited by:
    1. John A. Romley & Neeraj Sood, 2013. "Identifying the Health Production Function: The Case of Hospitals," NBER Working Papers 19490, National Bureau of Economic Research, Inc.
    2. Li, Jing, 2014. "The influence of state policy and proximity to medical services on health outcomes," Journal of Urban Economics, Elsevier, vol. 80(C), pages 97-109.
    3. Richard Hirth & David Grabowski & Zhanlian Feng & Momotazur Rahman & Vincent Mor, 2014. "Effect of nursing home ownership on hospitalization of long-stay residents: an instrumental variables approach," International Journal of Health Care Finance and Economics, Springer, vol. 14(1), pages 1-18, March.
    4. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-80, September.
    5. Boris Augurzky & Thomas Kopetsch & Hendrik Schmitz, 2013. "What accounts for the regional differences in the utilisation of hospitals in Germany?," The European Journal of Health Economics, Springer, vol. 14(4), pages 615-627, August.
    6. Grabowski, David C. & Feng, Zhanlian & Hirth, Richard & Rahman, Momotazur & Mor, Vincent, 2013. "Effect of nursing home ownership on the quality of post-acute care: An instrumental variables approach," Journal of Health Economics, Elsevier, vol. 32(1), pages 12-21.
    7. Joseph J. Doyle, Jr. & John A. Graves & Jonathan Gruber & Samuel Kleiner, 2012. "Do High-Cost Hospitals Deliver Better Care? Evidence from Ambulance Referral Patterns," NBER Working Papers 17936, National Bureau of Economic Research, Inc.

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