Examination of the synthetic control method for evaluating health policies with multiple treated units

Noemi Kreif, Richard Grieve, Dominik Hangartner, Alex James Turner, Silviya Nikolova and Matt Sutton

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper examines the synthetic control method in contrast to commonly used difference-in-differences (DiD) estimation, in the context of a re-evaluation of a pay-for-performance (P4P) initiative, the Advancing Quality scheme. The synthetic control method aims to estimate treatment effects by constructing a weighted combination of control units, which represents what the treated group would have experienced in the absence of receiving the treatment. While DiD estimation assumes that the effects of unobserved confounders are constant over time, the synthetic control method allows for these effects to change over time, by re-weighting the control group so that it has similar pre-intervention characteristics to the treated group. We extend the synthetic control approach to a setting of evaluation of a health policy where there are multiple treated units. We re-analyse a recent study evaluating the effects of a hospital P4P scheme on risk-adjusted hospital mortality. In contrast to the original DiD analysis, the synthetic control method reports that, for the incentivised conditions, the P4P scheme did not significantly reduce mortality and that there is a statistically significant increase in mortality for non-incentivised conditions. This result was robust to alternative specifications of the synthetic control method

Keywords: synthetic control method; difference-in-differences; policy evaluation; pay-for-performance (search for similar items in EconPapers)
JEL-codes: N0 (search for similar items in EconPapers)
Date: 2016-12-01
New Economics Papers: this item is included in nep-hea
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Citations: View citations in EconPapers (83)

Published in Health Economics, 1, December, 2016, 25(12), pp. 1514-1528. ISSN: 1057-9230

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http://eprints.lse.ac.uk/65074/ Open access version. (application/pdf)

Related works:
Journal Article: Examination of the Synthetic Control Method for Evaluating Health Policies with Multiple Treated Units (2016)
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