Real Effects of Financial Conditions: How Does Provider Financial Health Affect Opioid Prescription?

41 Pages Posted: 3 Dec 2024 Last revised: 7 Feb 2025

See all articles by Isil Erel

Isil Erel

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Shan Ge

New York University, Stern School of Business

Pengfei Ma

Singapore Management University - Lee Kong Chian School of Business

Date Written: November 15, 2024

Abstract

We examine how healthcare providers' financial health affects their opioid prescription decisions, using changes in house prices in providers' residential neighborhoods as shocks to their wealth. We find that providers increase opioid prescriptions when experiencing adverse financial conditions: a one-standard-deviation decrease in house price growth leads to a 3% increase in opioid prescriptions. Results are robust to including provider office-year fixed effect and using the subsample of providers who live far away from their offices, which largely rules out a patient-demand explanation.  Providers living in zip codes with price changes in the bottom half during 2007-2009 increased their opioid prescriptions by approximately 16% more in 2010-2012 than others. The effect is stronger among providers with greater home equity, those in competitive markets, and those serving vulnerable populations. Our findings reveal a previously undocumented channel through which providers' financial incentives affect opioid prescriptions.

Keywords: healthcare provider, real estate, financial conditions, opioid, prescription, wealth shock, ethics

JEL Classification: G51, I11, I14, R30, L15, I18, I13

Suggested Citation

Erel, Isil and Ge, Shan and Ma, Pengfei, Real Effects of Financial Conditions: How Does Provider Financial Health Affect Opioid Prescription? (November 15, 2024). NYU Stern School of Business Research Paper, Fisher College of Business Working Paper No. 2024-03-027, Charles A. Dice Working Paper No.  2024-27, Singapore Management University School of Business Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=5041743 or http://dx.doi.org/10.2139/ssrn.5041743

Isil Erel

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

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Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Shan Ge (Contact Author)

New York University, Stern School of Business ( email )

44 W 4th St
Suite 9-160
New York, NY 10012
United States

Pengfei Ma

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

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