Capacity and Utilization in Health Care: The Effect of Empty Beds on Neonatal Intensive Care Admission

Abstract

Because geographic variation in medical care utilization is jointly determined by both supply and demand, it is difficult to empirically estimate whether capacity itself has a causal impact on utilization in health care. In this paper, I exploit short-term variation in Neonatal Intensive Care Unit (NICU) capacity that is unlikely to be correlated with unobserved demand determinants. I find that available NICU beds have little to no effect on NICU utilization for the sickest infants, but do increase utilization for those in the range of birth weights where admission decisions are likely to be more discretionary.Amid rising health care costs and the political debate over health reform, excessive utilization of health care is an important topic. One concern is that the availability of supply itself directly leads to additional utilization, or, as Roemer (1961) put it, that "A built bed is a filled bed." Theoretically, physicians and hospitals face financial incentives to provide additional care on the margin when MRI machines, catheterization labs, or hospital beds are available. In addition to overutilization on the margin, these incentives can dynamically lead to further overinvestment in these high fixed cost facilities as providers compete for patients.Regional medical spending and utilization has been found to be correlated with regional differences in physician supply and hospital bed capacity (e.g. Fisher et al., 2000Fisher et al., , 2003Fisher et al., , 2004. However, even controlling for observable demographic characteristics, cross sectional comparisons across regions are not likely to represent causal estimates. As Fuchs (2004) points out, empirically testing the hypothesis that simply the availability of medical resources leads to additional utilization is difficult; it requires variation in supply that is not driven by patient demand and unobserved health conditions. In this paper, I overcome the endogeneity between capacity and utilization by exploiting short-run variation in the availability of neonatal intensive care unit (NICU) beds. Using hospital discharge data from California and New York, I estimate the effect of the number of empty beds available in the NICU the day prior to an infant's birth on the probability that the infant is admitted to the NICU, conditional on hospital-specific month fixed effects. These fixed effects flexibly control for many unobserved factors that might be correlated with NICU utilization and allow the estimates to exploit within-hospital-month variation in the availability of NICU beds. Unlike regional measures of capacity, within-hospital-month HHS Public AccessAuthor manuscript Am Econ J Econ Policy. Author manuscript; available in PMC 2016 December 07. shocks are unlikely to be correlated with patient demand and health characteristics, and I provide empirical evidence to support this identifying assumption.Neonatal intensive care is an important and interesting health care market in which to examine the effect of availability on utilization. It has been cl...

Hospital variation in admissions to neonatal intensive care units by diagnosis severity and category

“…We found that babies born at hospitals with more NICU beds were more likely to have NICU admissions, which is Table 2 Proportion of births with a given condition that were admitted to a neonatal intensive care unit, overall sample, and variation across hospitals. consistent with prior studies [24,25]. Examination of different hospital processes may allow for creation of standardized protocols or system processes to help reduce unnecessary NICU admissions, and thereby decrease adverse financial, psychosocial, and downstream health effects.…”

Variation in Use by NICU Types in the United States

“…Infants are admitted for many nonacute reasons, such as hypoglycemia and rule-out sepsis, and for specific interventions such as antibiotic administration or line placement. 23 More practically, bed supply 24,25 and supply-sensitive care 26 -28 may play roles in admission rates. In recent research, authors have pointed to possible overuse of NICU care, particularly among larger infants.…”

Emergency Department High Utilizers among Family Medicine Patients

“…16 Similarly, newborn intensive care unit bed supply was associated with increased admission rates for newborns with good health status. 17,18 These findings extend into primary care where outpatient visits increase with increased physician supply even after accounting for sociodemographic differences. 19 This may be extended to our finding that ED high utilizers from 1 geographical location in our com- munity increased at the same time that more resources became available.…”