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Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks

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Author Info
Amitabh Chandra
Douglas O. Staiger
Abstract

A large literature in medicine documents variation across areas in the use of surgical treatments that is unrelated to outcomes. Observers of this phenomenon have invoked “flat of the curve medicine” to explain it and have advocated for reductions in spending in high-use areas. In contrast, we develop a simple Roy model of patient treatment choice with productivity spillovers that can generate the empirical facts. Our model predicts that high-use areas will have higher returns to surgery, better outcomes among patients most appropriate for surgery, and worse outcomes among patients least appropriate for surgery, while displaying no relationship between treatment intensity and overall outcomes. Using data on treatments for heart attacks, we find strong empirical support for these and other predictions of our model and reject alternative explanations such as “flat of the curve medicine” or supplier-induced demand for geographic variation in medical care.

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 115 (2007)
Issue (Month): ()
Pages: 103-140
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Handle: RePEc:ucp:jpolec:v:115:y:2007:p:103-140

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  1. Joseph J. Doyle, Jr., 2007. "Returns to Local-Area Health Care Spending: Using Health Shocks to Patients Far From Home," NBER Working Papers 13301, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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This page was last updated on 2008-4-27.

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