Comparative Advantages and Patient-Provider Matching
If certain healthcare providers are especially proficient at treating certain types of patients, there may be large benefits to allocating patients to providers whose comparative advantages align with the patient's type. In this paper, I model a provider’s comparative advantages in terms of their ability to causally reduce one-year mortality for higher- and lower-risk patients, separately. To start, I derive sufficient statistics to measure the gains from optimal patient-provider matching that minimizes mortality compared to a random assignment under capacity constraints assuming true comparative advantages are known (first-best).
I then propose a methodology to measure gains from optimal matching using observational comparative advantages in the presence of patient sorting (second-best). I derive a low-dimensional set of parameters that allows us to identify the relationship between observational and true comparative advantages and thus unbiasedly quantify the gains from optimal matching. I use quasi-experiments that arise from provider exits to identify these parameters.
Applying this methodology to the Veterans Health Administration data, I find considerable variation in provider skill in treating lower- and higher-risk patients. A provider who is one s.d. above average for lower-risk patients can reduce one-year mortality by 0.37 p.p. (a 26.8% reduction of the average rate). A provider who is one s.d. above average for higher-risk patients can reduce one-year mortality by 0.68 p.p. (a 14.8% reduction of the average rate). Optimal matching between PCPs and new primary care patients can reduce one-year mortality by 0.3 p.p. (SE: 0.1) on average (a 14.6% reduction) if we assume higher- and lower-risk patients take up the same workload. If we assume that higher-risk patients take up twice the workload compared to lower-risk ones, optimal matching reduces one-year mortality by 0.2 p.p. (S.E.: 0.1) on average compared to random assignment (a 10.9% reduction).