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

Listed author(s):
  • Leila Agha
  • Brigham Frandsen
  • James B. Rebitzer

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23078.

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Date of creation: Jan 2017
Handle: RePEc:nbr:nberwo:23078
Note: AG HC HE PR
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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 Patient Migration," 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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