Health Economics

Long-Term Care Hospitals: A Case Study in Waste

Liran Einar, Amy Finkelstein, Neale Mahoney

There is substantial waste in U.S. healthcare, but little consensus on how to identify or combat it. We identify one specific source of waste: long-term care hospitals (LTCHs). These post-acute care facilities began as a regulatory carve-out for a few dozen specialty hospitals, but have expanded into an industry with over 400 hospitals and $5.4 billion in annual Medicare spending in 2014. We use the entry of LTCHs into local hospital markets and an event study design to estimate LTCHs’ impact.

Patient Loyalty in Hospital Choice: Evidence from New York

Mariano Irace

When choosing a hospital, patients favor facilities they have used in the past. Using data from New York, I investigate the sources of patient loyalty to hospitals. To distinguish persistent unobserved heterogeneity and state dependence, I exploit shocks that induce patients to try a new hospital: emergency hospitalizations and temporary hospital closures due to Hurricane Sandy. I find evidence of state dependence under minimal assumptions about the data generating process.