Do High-Cost Hospitals Deliver Better Care? Evidence from Ambulance Referral Patterns

52 Pages Posted: 31 Mar 2012

See all articles by Joseph J. Doyle

Joseph J. Doyle

Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA); National Bureau of Economic Research (NBER)

John Graves

Vanderbilt University

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Samuel A. Kleiner

Government of the United States of America - Federal Trade Commission

Date Written: March 2012

Abstract

Endogenous patient sorting across hospitals can confound performance comparisons. This paper provides a new lens to compare hospital performance for emergency patients: plausibly exogenous variation in ambulance-company assignment. Ambulances are effectively randomly assigned to patients in the same area based on rotational dispatch mechanisms. Using Medicare data from 2002-2008, we show that ambulance company assignment importantly affects hospital choice for patients in the same zip code. Using data for New York state from 2000-2006 that matches exact patient addresses to hospital discharge records, we show that patients who live very near each other but on either side of ambulance-dispatch boundaries go to different types of hospitals. Both strategies show that higher-cost hospitals have significantly lower one-year mortality rates compared to lower-cost hospitals. We find that common indicators of hospital quality, such as indicators for "appropriate care" for heart attacks, are generally not associated with better patient outcomes. On the other hand, we find that measures of "leading edge" hospitals, such as teaching hospitals and hospitals that quickly adopt the latest technologies, are associated with better outcomes, but have little impact on the estimated mortality-hospital cost relationship. We also find that hospital procedure intensity is a key determinant of the mortality-cost relationship, suggesting that treatment intensity, and not differences in quality reflected in prices, drives much of our findings. The evidence also suggests that there are diminishing returns to hospital spending and treatment intensity.

Suggested Citation

Doyle, Joseph John and Graves, John and Gruber, Jonathan and Kleiner, Samuel A., Do High-Cost Hospitals Deliver Better Care? Evidence from Ambulance Referral Patterns (March 2012). NBER Working Paper No. w17936, Available at SSRN: https://ssrn.com/abstract=2031924

Joseph John Doyle (Contact Author)

Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA) ( email )

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John Graves

Vanderbilt University ( email )

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Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Samuel A. Kleiner

Government of the United States of America - Federal Trade Commission ( email )

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