Title: Essays in Health Economics
Description: This dissertation consists of three essays in health economics, paying special attention to neonatal care provision and newborn health outcomes in the United States. The first chapter evaluates physician productivity, focusing on the matching between physician skills and patient conditions. High U.S. spending on health care is commonly attributed to its intensity of specialized, high-tech medical care. A growing body of research focuses on physicians whose medical decisions shape treatment intensity, costs, and patient outcomes. Often overlooked in this research is the assignment of physician skills to patient conditions, which may strongly affect health outcomes and productivity. This matching may be especially important in the case of hospital admissions as high-frequency fluctuations in patient flow make it challenging to maintain effective matches between the best-suited physicians and their patients. This paper focuses on hospitals’ responses to demand shocks induced by unscheduled high-risk admissions.

I show that these demand shocks result in physician–patient mismatches when hospitals are congested. Specifically, highly specialized physicians who are brought in to treat unscheduled high-risk admissions also treat previously admitted lower-risk patients. This leads to increased treatment intensity for lower-risk patients, which I attribute to persistence in physician practice style. Despite the greater treatment intensity, I find no detectable improvement in health outcomes, which prima facie could be viewed as waste. However, the mismatches observed only at high congestion levels more likely reflect hospitals’ careful assessment of costs and benefits when assigning physicians to patients – maintaining preferred physician–patient matching can be particularly costly when congestion is high. My findings highlight the need to consider both heterogeneity within patient and physician type, and furthermore show how the common phenomenon of demand uncertainty can promote mismatch between these types.

The second chapter assesses hospital self-reported facility data quality using annual Institutional Cost Report (ICR). In the United States, hospital facilities are under public and government supervision. The central motivation behind this is that overbuilding and redundancy in health care facilities will lead to overutilization and higher health care costs. However, little is known about the effectiveness of these facility regulation policies. Taking certified capacities recorded by the Department of Health as reliable benchmarks, this paper presents evidence that hospitals upcode their neonatal intensive care unit (NICU) bed levels when reporting capacities in ICR. Reported NICU utilization in ICR is mostly under the top level NICU bed, which matches the bed capacity upcoding pattern. This indicates either significant overutilization which leads to NICU overcrowding, or upcoding in medical billing that results in inflated medical charges. Findings in this paper point to a potentially effective way for regulators and insurers to limit overutilization – improving hospitals’ compliance with their certified capacities.

This paper also provides important guidelines for a large body of research that uses ICR data by developing an assessment of ICR data quality. The third chapter, which is joint work with Douglas Almond, measures gender inequality in perinatal health among Chinese-American newborns. The literature on “missing girls" suggests a net preference for sons both in China and among Chinese immigrants to the West. Perhaps surprisingly, we find that newborn Chinese-American girls are treated more intensively in US hospitals: they are kept longer following delivery, have more medical procedures performed, and have more hospital charges than predicted (by the non-Chinese gender difference). What might explain more aggressive medical treatment? We posit that hospitals are responding to worse health at birth of Chinese-American girls. We document higher rates of low birth weight, congenital anomalies, maternal hypertension, and lower APGAR scores among Chinese American girls – outcomes recorded prior to intensive neonatal medical care and relative to the non-Chinese gender gap.

To the best of our knowledge, we are the first to find that son preference may also compromise “survivor" health at birth. On net, compromised newborn health seems to outweigh the benefit of more aggressive neonatal hospital care for girls. Relative to non-Chinese gender differences, death on the first day of life and in the post-neonatal period is more common among Chinese-American girls, i.e. later than sex selection is typically believed to occur.