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Causes and Consequences of Fragmented Care Delivery: Theory, Evidence, and Public Policy

Author

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  • Leila Agha
  • Brigham Frandsen
  • James B. Rebitzer

Abstract

Fragmented health care occurs when care is spread out across a large number of poorly coordinated providers. We analyze care fragmentation, an important source of inefficiency in the US healthcare system, by combining an economic model of regional practice styles with an empirical study of Medicare enrollees who move across regions. Roughly sixty percent of cross-regional variation in care fragmentation is independent of patients’ clinical needs or preferences for care. A one standard deviation increase in regional fragmentation is associated with a 10% increase in care utilization. We distinguish between two sources of care fragmentation: primary care fragmentation, where a patient’s care is split across many general practitioners, and specialty fragmentation, where a patient’s care is split across many distinct types of specialists. While both types of fragmentation are associated with higher total utilization, more total visits, and fewer visits with primary care providers, primary care fragmentation also leads to significant increases in hospitalizations. We demonstrate these findings are not explained by regional differences in population density or physician capacity. Applying our model, we identify conditions under which anti-fragmentation policies can improve efficiency.

Suggested Citation

  • Leila Agha & Brigham Frandsen & James B. Rebitzer, 2017. "Causes and Consequences of Fragmented Care Delivery: Theory, Evidence, and Public Policy," NBER Working Papers 23078, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23078
    Note: AG HC HE PR
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    References listed on IDEAS

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    1. 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.
    2. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 299-322 National Bureau of Economic Research, Inc.
    3. Amy Finkelstein & Matthew Gentzkow & Heidi Williams, 2016. "Sources of Geographic Variation in Health Care: Evidence From PatientMigration," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1681-1726.
    4. Katherine Baicker & Amitabh Chandra, 2004. "The Productivity of Physician Specialization: Evidence from the Medicare Program," American Economic Review, American Economic Association, vol. 94(2), pages 357-361, May.
    5. Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2008. "Organizational Fragmentation and Care Quality in the U.S. Healthcare System," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 93-113, Fall.
    6. Brigham Frandsen & James B. Rebitzer, 2014. "Structuring Incentives Within Organizations: The Case of Accountable Care Organizations," NBER Working Papers 20034, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Erin Johnson & M. Marit Rehavi & David C. Chan, Jr & Daniela Carusi, 2016. "A Doctor Will See You Now: Physician-Patient Relationships and Clinical Decisions," NBER Working Papers 22666, National Bureau of Economic Research, Inc.
    2. Zeltzer, Dan, 2017. "Gender Homophily in Referral Networks: Consequences for the Medicare Physician Earnings Gap," IZA Discussion Papers 11230, Institute for the Study of Labor (IZA).
    3. Leila Agha & Keith Marzilli Ericson & Kimberley H. Geissler & James B. Rebitzer, 2018. "Team Formation and Performance: Evidence from Healthcare Referral Networks," NBER Working Papers 24338, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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