Measuring Returns to Hospital Care: Evidence from Ambulance Referral Patterns

We consider whether hospitals that receive higher payments from Medicare improve patient outcomes, using exogenous variation in ambulance company assignment among patients who live near one another. Using Medicare data from 2002–10 on assignment across ambulance companies and New York State data fro...

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Bibliographic Details
Published in:The Journal of political economy 2015-02, Vol.123 (1), p.170-214
Main Authors: Doyle, Joseph J., Graves, John A., Gruber, Jonathan, Kleiner, Samuel A.
Format: Article
Language:English
Subjects:
Ambulance services
Ambulances
Clinical outcomes
Economic theory
Health care
Health care economics
Health care payments
Health outcomes
Health policy
Hospital costs
Hospitals
Medicare
Mortality
New York
Nonprofit hospitals
Patients
Payments
Political economy
Reimbursement
Social policy
Studies
Teaching hospitals
U.S.A
ZIP codes
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Summary:We consider whether hospitals that receive higher payments from Medicare improve patient outcomes, using exogenous variation in ambulance company assignment among patients who live near one another. Using Medicare data from 2002–10 on assignment across ambulance companies and New York State data from 2000–6 on assignment across area boundaries, we find that patients who are brought to higher-cost hospitals achieve better outcomes. Our estimates imply that a one standard deviation increase in Medicare reimbursement leads to a 4 percentage point (or 10 percent) reduction in mortality; the implied cost per at least 1 year of life saved is approximately $80,000.
ISSN:0022-3808
1537-534X
DOI:10.1086/677756