Hospital treatment and patient outcomes: Evidence from capacity constraints

Understanding the relationship between health care service provision and patient outcomes has become more important as providers are increasingly evaluated on the efficacy of their care delivery. This study examines this relationship using an approach that recognizes the role that capacity constraints at hospitals within a local area serve in patient allocation. Hourly data on hospital patient censuses over a 12-year period show that hospital assignment is influenced by supply-side, hospital-level constraints on the number of empty beds available for the period during which treatment is sought. Using this as a source of variation, the estimates indicate that treatment at a more procedure-intensive hospital lowers readmission rates, and that the effect is particularly pronounced for unplanned hospital readmissions. The results reinforce the importance of identifying the relationship between treatment intensity and outcomes in a causal framework and indicate that these hospitals are providing higher quality care.