When big brother knows best

Saving Lives by Tying Hands: The Unexpected Effects of Constraining Health Care Providers

Abstract:

The emergency department (ED) is a complex node of healthcare
delivery that is facing market and regulatory pressure across
developed economies to reduce wait times. In this paper we study
how ED doctors respond to such incentives, by focussing on a
landmark policy in England that imposed strong incentives to
treat ED patients within four hours. Using bunching techniques,
we estimate that the policy reduced affected patients’ wait times
by 19 minutes, yet distorted a number of medical decisions. In
response to the policy, doctors increased the intensity of ED
treatment and admitted more patients for costly inpatient care.
We also find a striking 14% reduction in mortality. To determine
the mechanism behind these health improvements, we exploit
heterogeneity in patient severity and hospital crowding, and find
strongly suggestive evidence that it is the reduced wait times,
rather than the additional admits, that saves lives. Overall we
conclude that, despite distorting medical decisions, constraining
ED doctors can induce cost-effective reductions in mortality.

by Jonathan Gruber, Thomas P. Hoe, George Stoye

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