Real Effects of Financial Conditions: How Does Provider Financial Health Affect Opioid Prescription?
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
41 Pages Posted: 3 Dec 2024 Last revised: 7 Feb 2025
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: Suggested Citation