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

Yingqian Tang () and Haruko Noguchi
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Yingqian Tang: Faculty of Political Science and Economics, Waseda University, and Waseda Institute of Social & Human Capital Studies (WISH)
Haruko Noguchi: Faculty of Political Science and Economics, Waseda University and WISH

No 2409, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: 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.

Keywords: Hospital capacity; Physician behavior; Supplier-induced demand; Healthcare expenditure; Aging population (search for similar items in EconPapers)
JEL-codes: I11 I18 J14 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2025-01
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