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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

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)

Suggested Citation

  • Joseph J. Doyle, 2011. "Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 221-243, July.
  • 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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    References listed on IDEAS

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    1. 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.
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    3. 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.
    4. Cutler, David, 2007. "The Lifetime Costs and Benefits of Medical Technology," Scholarly Articles 2643640, Harvard University Department of Economics.
    5. Cutler, David M., 2007. "The lifetime costs and benefits of medical technology," Journal of Health Economics, Elsevier, vol. 26(6), pages 1081-1100, December.
    6. 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, Oxford University Press, vol. 113(4), pages 991-1024.
    7. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
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    Citations

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    Cited by:

    1. He, Daifeng & McInerney, Melissa & Mellor, Jennifer, 2015. "Physician responses to rising local unemployment rates: Healthcare provision to Medicare and privately insured patients," Journal of Health Economics, Elsevier, vol. 40(C), pages 97-108.
    2. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, pages 645-680.
    3. Bertoli, Paola & Grembi, Veronica, 2017. "The political economy of diagnosis-related groups," Social Science & Medicine, Elsevier, pages 38-47.
    4. Rahman, Momotazur & Norton, Edward C. & Grabowski, David C., 2016. "Do hospital-owned skilled nursing facilities provide better post-acute care quality?," Journal of Health Economics, Elsevier, vol. 50(C), pages 36-46.
    5. Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Medicaid Insurance in Old Age," American Economic Review, American Economic Association, pages 3480-3520.
    6. Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, pages 645-680.
    7. Hockenberry, Jason M. & Helmchen, Lorens A., 2014. "The nature of surgeon human capital depreciation," Journal of Health Economics, Elsevier, vol. 37(C), pages 70-80.
    8. 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.
    9. 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.
    10. 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 Economics and Management, Springer, pages 1-18.
    11. 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;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(4), pages 615-627, August.
    12. Jensen, Vibeke Myrup & Wüst, Miriam, 2015. "Can Caesarean section improve child and maternal health? The case of breech babies," Journal of Health Economics, Elsevier, vol. 39(C), pages 289-302.
    13. Gautam Gowrisankaran & Keith A. Joiner & Pierre-Thomas Léger, 2017. "Physician Practice Style and Healthcare Costs: Evidence from Emergency Departments," NBER Working Papers 24155, National Bureau of Economic Research, Inc.
    14. 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.
    15. 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.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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    1. Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home (AEJ:AE 2011) in ReplicationWiki

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