Abstracts Category : Other

Essays on the impact of supply-side regulation in UShealth care markets

by Bryan J Perry

In this thesis, I take up the question of howgovernment regulations impact the supply side of the US health caremarket. In Chapter 1, I exploit the Medicare rural floor, adiscontinuity in geographic adjustments to Medicare payments tohospitals, in a regression kink design to estimate the impact ofMedicare reimbursement rate changes on the level and mix ofhospital services provided. I find that hospitals respond to higherMedicare reimbursement by admitting more Medicare patients, butthat the average duration of a patient stay declines. I alsodocument a previously unstudied spillover of Medicare reimbursementon the volume of admitted patients with non-Medicare insurance. Forthe remainder of my thesis, I turn my attention to Certificate ofNeed regulation-restrictions on capital investment-in NorthCarolina. I use newly collected data on the MRI market in NorthCarolina to estimate the dynamic effects of marginal relaxations ofCON restrictions on provider investment. Thresholds in theregulatory approval process enable me to employ a regressiondiscontinuity model to estimate the effects of CON on hospitals andpatients. In Chapter 2 I document three key findings. First, healthcare providers essentially always adopt newly allowed MRI scannerswithin two years of a CON approval. This suggests that CONregulations are a binding constraint on investment. Second, thereis an active market for unregulated mobile MRI scanners that enablehealth care providers to mitigate the impact of CON restrictions.Finally, MRI utilization increases after new machines are acquired,indicating CON rules affect not only hospital investment but alsomedical practice. In Chapter 3 I combine the North Carolinaregulatory data with patient-level Medicare claims data to estimatethe effects of CON on patient care. Hospitals do not offsetreductions in MRI services with increased usage of alternativediagnostic imaging technologies. CON regulations reduce the numberof scans patients with lower back pain receive by more than a thirdin the month following their first hospital encounter, reducingmedical spending by roughly $400. There is no evidence that thisdecrease in the intensity of care comes at the cost of increasedfuture lower back pain.Advisors/Committee Members: James M. Poterba, Williams (advisor).