Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks

Posted: 7 Feb 2007

See all articles by Amitabh Chandra

Amitabh Chandra

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Douglas Staiger

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

A large literature in medicine documents variation across areas in the use of surgical treatments that is unrelated to outcomes. Observers of this phenomenon have invoked "flat of the curve medicine" to explain it and have advocated for reductions in spending in high-use areas. In contrast, we develop a simple Roy model of patient treatment choice with productivity spillovers that can generate the empirical facts. Our model predicts that high-use areas will have higher returns to surgery, better outcomes among patients most appropriate for surgery, and worse outcomes among patients least appropriate for surgery, while displaying no relationship between treatment intensity and overall outcomes. Using data on treatments for heart attacks, we find strong empirical support for these and other predictions of our model and reject alternative explanations such as "flat of the curve medicine" or supplier-induced demand for geographic variation in medical care.

Suggested Citation

Chandra, Amitabh and Staiger, Douglas, Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks. Journal of Political Economy, Vol. 115, pp. 103-140, February 2007. Available at SSRN: https://ssrn.com/abstract=961835

Amitabh Chandra (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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

Douglas Staiger

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States
603-643-2979 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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