Research

Published and Forthcoming Papers

"How Acquisitions Affect Firm Behavior and Performance: Evidence from the Dialysis Industry," with Ben Heebsh, Ryan McDevitt, and James Roberts,  Quarterly Journal of Economics, February 2020.

Abstract: We study how acquisitions influence a firm's strategy and performance. Using a rich panel of Medicare claims data for nearly one million dialysis patients, we document several pronounced changes at the approximately 1,200 independent facilities acquired by large chains during our sample period. Most notably, acquired facilities increase patients' doses of highly reimbursed drugs, replace high-skill nurses with less-skilled technicians, and waitlist fewer patients for a kidney transplant. Although adopting the acquiring firm's strategy results in higher Medicare payments for the acquired facility, it leads to worse patient outcomes for hospitalizations and mortality.

"Strategic Patient Discharge: The Case of Long-Term Care Hospitals," with Paul Grieco, Ryan McDevitt, and James Roberts,  American Economic Review, November 2018.

Abstract: Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) provides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a pre-specified number of days. We show that LTCHs respond to the financial incentives of this system by disproportionately discharging patients after they cross the large-payment threshold. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities co-located with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare.

"Can Fiscal Rules Constrain the Size of Government? An Analysis of the 'Crown Jewel' of Tax and Expenditure Limitations," with Byron Lutz, forthcoming in the Journal of Public Economics, November 2018.

Abstract: Fiscal rules attempt to alter budget outcomes by constraining policy makers. They have been one of the primary responses to the recent string of fiscal crises around the globe. We ask if these rules succeed in altering fiscal outcomes by examining what is arguably the most stringent set of fiscal rules in the U.S.---Colorado's Taxpayer Bill of Rights (TABOR). As TABOR attempts to constrain both taxes and expenditures, we develop a novel approach of estimating treatment effects for multiple outcomes simultaneously using the synthetic control methodology of Abadie et al.(2010). Although there will always be a degree of uncertainty over external validity when a policy is enacted in only a single state, our results provide no evidence that TABOR affected the level of taxes or spending in Colorado and are precise enough to rule out large negative effects. Thus, no support is found for the contention that fiscal rules alter budget outcomes. Instead, TABOR appears to have been partly evaded by policy makers and voters despite its stringency and partly nothing more than a ratification of the state's preference over the size of its public sector.

Working Papers

"The Effect of Bundled Payments on Provider Behavior and Patient Outcomes," with Benjamin Heebsh, Riley J. League, Ryan C. McDevitt, and James W. Roberts, revise and resubmit at the American Economic Review, 2020.

Abstract: We consider how health care providers respond to bundled payments. Using claims data from dialysis patients, we show that facilities cut their use of injectable anemia drugs in half following Medicare's transition from fee-for-service reimbursements to a bundle. We identify the causal effects of the payment reform using a novel instrumental variable --- patients at higher elevations naturally require lower doses of anemia drugs --- and find that lower doses caused a decrease in mortality but an increase in blood transfusions. Allocative efficiency increased from this change as providers reduced doses more for patients who benefit little from the drug.

"Ambulance Taxis: The Impact of Regulation and Litigation on Health Care Fraud," with Riley League, Jetson Leder-Luis, Ryan McDevitt, and James Roberts, revise and resubmit at the Journal of Political Economy, 2023.

Abstract: We study the relative effectiveness of administrative regulations, criminal enforcement, and civil whistleblower lawsuits for combatting health care fraud. Between 2003 and 2017, Medicare spent $7.7 billion on 37.5 million regularly scheduled, non-emergency ambulance rides for patients traveling to and from dialysis facilities, with dozens of lawsuits alleging that Medicare reimbursed rides for patients who did not meet the requirements for receiving one. Using a novel data set and an identification strategy based on the staggered timing of regulations and lawsuits across the US, we find that a regulation requiring prior authorization for ambulance reimbursements reduced spending much more than criminal and civil lawsuits did. Despite the sharp drop in both ambulance transports and the companies that provide them following prior authorization, patients’ health outcomes did not change, indicating that most rides were not medically necessary. Our results suggest that administrative actions have a much larger impact than targeted criminal enforcement, providing novel evidence that regulations may be more cost-effective than ex post ligation for preventing health care fraud.

"Price Regulation and Market Structure: Evidence from the Dialysis Industry," July 2021.

Abstract: This paper develops and estimates a structural model of the U.S. dialysis industry to investigate the role of price regulation in health care. Endogenous entry and investment drive a wedge between short- and long-run outcomes. I find that increasing Medicare’s reimbursement rate by 10 percent improves patient survival by 2.1 percentage points, holding market structure fixed. Allowing entry results in a 25% greater improvement in survival and additional gains as patients enjoy improved access to care, improving the policy’s cost-effectiveness. Proposed payment caps on private insurance rates likely harm patients beyond the resulting cost savings.

Formerly circulated as ""Market Power and Quality: Congestion and Spatial Competition in the Dialysis Industry,.

"Gaming and Effort in Performance Pay" with Luca Bertuzzi, Ben Heebsh, Ryan McDevitt, and James Roberts, 2023.

Abstract: Health insurers often tie payments to providers' quality of care. Although payers do this to elicit more effort from providers, some providers may game the system by avoiding patients who would cause their quality scores to fall. We use annual variation in the criteria for Medicare's Quality Incentive Program in dialysis to distinguish strategic patient dropping from higher-quality care. Patients who would reduce their facilities' scores are 14.3-71.5 percent more likely to switch facilities, often to ones that suggest the move was involuntary, while under certain conditions facilities exert more effort to improve their scores by providing better care.

"Profit Sharing and Patient Steering: Joint Ventures in Dialysis," with Ryan McDevitt and James Roberts, draft coming. 

"Measuring the Employment Impacts of Shale Gas Development," with Christopher Timmins, 2014.

Abstract: In recent years technological innovations in drilling and shale stimulation have produced a boom in the natural gas extraction industry across the portion of Pennsylvania that is situated on the Marcellus Shale.  The development of this resource provides a relevant setting in which to study the effects of a natural resource boom on local labor markets.  By employing a distributed lag model to estimate the impact of shale development on the labor market, we are able to identify and compare the short-run and long-run effects on employment and earnings.   We also use quantile methods to allow for heterogeneous effects.  To control for confounding factors, we employ synthetic controls in a way similar to a difference-in-difference.  Our findings indicate that fracking has a positive and substantial effect on total employment but little impact on earnings, suggesting a slack labor market.  In addition, we find evidence consistent with “Dutch disease”—a situation where a natural resource boom contributes to a contraction in the traded-goods sector.  We also demonstrate how replacing the distributed lag model with a standard assumption that all shale development has an equal impact on employment regardless of timing can produce misleading results.  Finally, we document that while on average fracking contributed only about 2% of job growth, in a few counties it was responsible for as much as 10% of total job creation.  

Research in Progress

"Learning by Dosing"

"The Effect of Quality Incentive Programs on Patient Access to Care"

"Monopsony Power in Healthcare"

"Competition in Pharmaceutical Drug Markets: Formularies and Rebates"

"Vertical Integration in Post-Acute Care"

"Acquisitive Innovation and Antitrust Regulation: Evidence from the Medical Device Industry"