We note first that 24% of all private facilities in treatment markets that were open at our baseline were closed by the government at some point in time. These facilities were mostly unlicensed (45% of unlicensed facilities were closed by the government compared to 7% of licensed facilities), and even though _all_ unlicensed facilities were supposed to be closed, actual closure rates were much higher (61%) among facilities in the lowest quintile of JHIC scores compared to the top quintile (11%). Among licensed facilities, facilities in the bottom two quintiles experienced a 11% to 21% rate of closures, compared to a negligible 1% to 3% among facilities in the top quintiles. Finally, overall exit rates in treatment markets are smaller than the closure rate: this is because many facilities reopened after being closed by the government and most of them do so without obtaining the required licenses. Both because the patterns of exits in treatment markets are very similar to what we see in the control group and because closed facilities seem to re-open, the impact of the treatment on exit rates will be smaller than the rate of government closure—emphasizing the difference between the impact of regulation from its proximate effect, which is what regular monitoring data would provide.

In Table 5, we use the census of facilities at randomization to estimate a 3.4-percentage point increase (p-value = 0.238) in exits among treated private facilities. This impact is not statistically significant and it is zero for public facilities. It is only when we look at variation by licensing status that significant differences arise, with unlicensed facilities 8.9 percentage points (37%, p-value = 0.046), more likely to exit in treated compared to control markets. Coding all outpatients as zero for inactive facilities shows that facilities that were unlicensed at randomization also see a decline in their outpatient load of 3.1 patients (p-value _<_ 0.010) or 43% compared to an average of 7.1 in control, with no impact on the outpatient caseload for licensed facilities. We conclude that facilities unlicensed at randomization were most affected by the regulation in terms of closures and loss of business. Again, this is consistent with unlicensed facilities _at endline_ maintaining their patient load, as facilities that were closed were replaced by new unlicensed facilities or simply reopened, often without obtaining their licenses.

Table A5 shows that overall results on JHIC score and OOP for facilities open at randomization remain the same as those reported for the whole sample at endline (Table 3), with impacts slightly higher for the former. These differences widen further for private facilities that show an increase of 21% (p-value _<_ 0.010) and even more so for licensed facilities that report an increase in the JHIC score of 8.8 percentage points (p-value _<_ 0.010), or 23%—the highest impact on patient safety reported across all groups. While we do not emphasize these results as they pertain only to surviving facilities, they presage two important discussions below. First, they suggest that improvements in treated markets mostly reflect gains in existing facilities (rather than exit or entry) and second, they show that even as licensed facilities experienced _lower_ rates of government closures, they improved the most. This will guide our discussion when we turn to mechanisms below.

22