The Economic Impact of Healthcare Quality

67 Pages Posted: 28 Aug 2019

See all articles by Anne-Line Koch Helsø

Anne-Line Koch Helsø

KU Leuven - Faculty of Business and Economics (FEB)

Nicola Pierri

International Monetary Fund (IMF)

Adelina Yanyue Wang

Stanford University

Date Written: August 2019

Abstract

We study the costs of hospitalizations on patients' earnings and labor supply, using the universe of hospital admissions in Denmark and full-population tax data. We evaluate the quality of treatment based on its ability to mitigate the labor market consequences of a given diagnosis and propose a new measure of hospital quality, the "Adjusted Earning Losses" (AEL). We find a 4 percentage points difference in lost earnings between the best and worst large Danish hospitals, all else equal. We show that AEL contains significant additional information relative to traditional measures and does not suffer from worse selection issues. We also document a large decline in the labor cost of hospitalizations over time, with large variations across diseases. We find that the average post-hospitalization reduction in labor earnings declined by 25 percent (50 percent) on the intensive (extensive) margin between 1998 and 2012.

Keywords: Labor market characteristics, Labor markets, Labor force participation, Labor costs, Labor supply, Hospital quality, healthcare quality, health shocks, hospital productivity, AEL, hospital admission, heterogeneity, inpatient admission, outcome variable

JEL Classification: I1, D24, E2, E01, J3, Z13, O4

Suggested Citation

Helsø, Anne-Line Koch and Pierri, Nicola and Wang, Adelina Yanyue, The Economic Impact of Healthcare Quality (August 2019). IMF Working Paper No. 19/173, Available at SSRN: https://ssrn.com/abstract=3444148

Anne-Line Koch Helsø (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Nicola Pierri

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Adelina Yanyue Wang

Stanford University ( email )

Stanford, CA 94305
United States

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