Do Hospital Beds Fill Themselves? Capacity, Physician Behavior, and Healthcare Spending

We provide causal evidence that increased bed availability induces substitution from outpatient to inpatient care without improving health outcomes—consistent with physicians operating on the “flat of the curve.” We find that capacity effects concentrate in regions with abundant physicians and high baseline bed capacity, supporting target income models and Roemer’s Law. Conservative estimates suggest these discretionary admissions generate 38-63 million USD potentially avoidable spending annually. Our findings demonstrate that supply-side factors drive geographic variation in healthcare utilization and indicate meaningful scope for cost reduction through capacity optimization without compromising access to medically necessary care in aging societies.