Healthcare Economist

In standard analyses, if unobservable better quality physicians prefer to live in rich areas where patients have unobservably better baseline health and these physician characteristics are correlated with observed characteristics, it could be the case that researchers misattribute a causal effect to a specific physician attribute. Patients treated at for‐profit hospitals may be different in unmeasured ways from patients treated at other hospitals—in preferences for preventive care, level of social support, or health status. In the case of measuring the effect of being a for-profit hospital, researchers would need an instrument that “exogenously pseudo‐randomizes hospitals to be for‐profit—say, an instrument based on what competitor hospitals in the market are doing, or a change in laws about for‐profit status”. While they also use a patient-level instrument, they also conducted a series of robustness checks using a dose–response strategy based on the percent of patients in a dementia Special Care Unit and comparisons to patients without dementia in order to isolate the causal effect of Special Care Units from unmeasured hospital quality.

Is caregiving by family members superior to paid home health caregiving? According to a paper by Coe et al. We find that some family involvement in home‐based care significantly decreases health‐care utilization: lower likelihood of emergency room use, Medicaid‐financed inpatient days, any Medicaid hospital expenditures, and fewer months with Medicaid‐paid inpatient use. We find that individuals who have some family involved in home‐based care are less likely to have several adverse health outcomes within the first 9 months of the trial, including lower prevalence of infections, bedsores, or shortness of breath, suggesting that the lower utilization may be due to better health outcomes.

And finally, attending an Ivy League school is not on the causal pathway between exposure and outcome; attending an Ivy League school does not affect the socioeconomic status of your family when you were growing up. In my example, you could compare high socioeconomic children who did vs. did not go to Ivy League schools and then do another comparison of low socioeconomic status children and compare later in life income for those who did vs. did not attend Ivy League schools. In this case, a parent’s socioeconomic status has no direct effect on income nor does it effect the likelihood of attending an Ivy League school. If these better study habits lead to better grades, then we would see that while Ivy League schools lead to higher income overall, the effect would be larger for children of high status parents because they would get higher grades.

The National Institute for Health Care Management (NIHCM) has some nice slides describing trends in hospital consolidation. In 49% of cases, the acquired (i.e., smaller) hospital has revenue of >$100m and in 19% of cases the acquired hospitals has revenues of more than $500m. Continued mergers over time have lead to the emergency of very large regional and national hospital systems. While mergers have the potential to increase efficiencies due to economies of scale, any efficiencies captured are rarely passed on to consumers.