Should Top Surgeons Practice at Top Hospitals? Sorting and Complementarities in Healthcare (Job Market Paper)
How does the existence of complementarities between surgeon and hospital quality impact aggregate patient outcomes? Using Medicare data, I examine the joint production function of patient survival between surgeons and hospitals in the context of coronary artery bypass graft (CABG) surgery. Cardiac surgeons tend to be independent from hospitals; they perform surgeries at multiple hospitals within the same year. I leverage this variation in a two-way fixed-effects strategy with interactions between hospital and surgeon quality. I address high-dimensionality issues in a model with two-sided heterogeneity and potential selection of patients into providers using a two-step grouped fixed-effects approach with partial endogenization of network formation. I find that cardiac surgeons engage in positive assortative matching, where higher-survival surgeons practice at higher-survival hospitals. However, this matching does not maximize aggregate survival: low-survival surgeons have much higher returns from practicing at a high-survival hospital than high-survival surgeons do. Partial equilibrium exercises suggest that 30-day mortality from CABG could be reduced by 20% by reallocating low-survival surgeons to high-survival hospitals. Half the gains from these national reallocations can be achieved by reallocating surgeons within regions.
Market Size and Trade in Medical Services
NBER WP #31030 (with Jonathan Dingel, Josh Gottlieb, and Maya Lozinski)
We measure the importance of increasing returns to scale and trade in medical services. Using Medicare claims data, we document that "imported" medical care — services produced by a medical provider in a different region — constitute about one-fifth of US healthcare consumption. Larger regions specialize in producing less common procedures, which are traded more. These patterns reflect economies of scale: larger regions produce higher-quality services because they serve more patients. Because of increasing returns and trade costs, policies to improve access to care face a proximity-concentration tradeoff. Production subsidies and travel subsidies can impose contrasting spillovers on neighboring regions.
Media mention: Washington Post, The Center Square
Firms, Markets, and the Division of Labor: The Case of Physicians
(with Maya Lozinski)
Why and how do physicians co-locate to provide care? We establish several novel facts regarding this question. First, the number of healthcare establishments grows with an elasticity near one with market size, so that a doubling of population results in twice as many healthcare establishments. Notably, the average size of healthcare establishments does not increase measurably with the market size. We also show that the composition of establishments varies substantially with market size, even though they remain the same size. As market size grows, physicians co-locate more with same-specialty colleagues, individually produce a narrower set of services, and collectively produce a larger set and volume of services. These results suggest that coordination costs substantially constrain establishment size. In addition, they imply that same-specialty colleagues become more valuable as the market size grows due to an increasingly fine division of labor, allowing for production efficiencies.
Rapid Technological Advancements and the Organization of Expert Work
(with Maya Lozinski)