Identifying the Health Production Function: The Case of Hospitals

John Romley and Neeraj Sood

No 19490, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Estimates of the returns to medical care may reflect not only the efficacy of more intensive care, but also unmeasured differences in patient severity or the productivity of health-care providers. We use a variety of instruments that are plausibly orthogonal to heterogeneity among providers as well as patients to analyze the intensity of care and 30-day survival among Medicare patients hospitalized for heart attack, congestive heart failure and pneumonia. We find that the intensity of care is endogenous for two out of three conditions. The elasticity of 30-day mortality with respect to care intensity increases in magnitude from -0.27 to -0.71 for pneumonia and from -0.16 to -0.33 for congestive heart failure, when we address the identification problem. This finding is consistent with the hypotheses that care intensity at hospitals tends to decrease with hospital productivity, or increase with unmeasured patient severity.

JEL-codes: D24 I1 I12 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-eff and nep-hea
Note: EH IO
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Citations: View citations in EconPapers (7)

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