Fragmented Division of Labor and Healthcare Costs: Evidence from Moves Across Regions

56 Pages Posted: 23 Jan 2017 Last revised: 22 Jan 2022

See all articles by Leila Agha

Leila Agha

Boston University

Brigham R. Frandsen

Brigham Young University - Department of Economics

James B. Rebitzer

Boston University School of Management; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: January 2017

Abstract

Policies aiming to improve healthcare productivity often focus on reducing care fragmentation. Care fragmentation occurs when services are spread across many providers, potentially making coordination difficult. Using Medicare claims data, we analyze the effect of moving to a region with more fragmented care delivery. We find that 60% of regional variation in care fragmentation is independent of patients' individual demand for care and moving to a region with 1 SD higher fragmentation increases care utilization by 10%. When patients move to more fragmented regions, they increase their use of specialists and have fewer encounters with primary care physicians. More fragmented regions have more intensive care provision on many margins, including services sometimes associated with overutilization (hospitalizations, emergency department visits, repeat imaging studies) as well as services associated with high value care (vaccines, guideline concordant for diabetics).

Suggested Citation

Agha, Leila and Frandsen, Brigham R. and Rebitzer, James B., Fragmented Division of Labor and Healthcare Costs: Evidence from Moves Across Regions (January 2017). NBER Working Paper No. w23078, Available at SSRN: https://ssrn.com/abstract=2903779

Leila Agha (Contact Author)

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Brigham R. Frandsen

Brigham Young University - Department of Economics ( email )

130 Faculty Office Bldg.
Provo, UT 84602-2363
United States

James B. Rebitzer

Boston University School of Management ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617 3837356 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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