Work in Progress
Market Size and Trade in Medical Services (with Jonathan Dingel, Josh Gottlieb, and Pauline Mourot)
[Revisions requested at American Economic Review]
We document substantial interregional trade in medical services and investigate whether regional economies of scale explain it. In Medicare data, one-fifth of production involves a doctor treating a patient from another region. Larger regions produce greater quantity, quality, and variety of medical services, which they “export” to patients from smaller regions. These patterns reflect scale economies: greater demand enables larger regions to improve quality, so they attract patients from elsewhere. Contrary to concerns that production is too concentrated, we estimate that larger regions have higher marginal returns. We study counterfactual policies that would lower travel costs rather than relocating production.
Resources: BFI Summary, BibTex, Public Data
Media: Washington Post, The Center Square, Chicago Booth Review, For All
Knowledge Growth and Organization of Expert Work: Evidence from Oncologists
How does the expansion of general knowledge influence worker specialization and the adoption of new technologies? This study empirically addresses this question within the field of medical oncology, which has experienced rapid knowledge growth, as evidenced by the evolution of cancer treatment guidelines. A small proportion of initially specialized oncologists respond to this growth by further narrowing their focus. In contrast, the majority remain generalists and do not increase their level of specialization over time, even in the phase of expanding knowledge. These divergent responses appear to reflect differing constraints: extremes of specialization are significantly influenced by scale, with specialization increasing substantially with organization size – particularly in academic institutions – and the size of the local healthcare market. However, generalists encounter coordination costs that persist regardless of organizational or market scale. Importantly, specialization is increasingly associated with differences in patient care. Over time, specialists are more likely to prescribe recently approved anti-cancer drugs and have greater clinical experience with their medications compared with generalists. These findings suggest that, in response to rapid knowledge growth, some professionals may not specialize further but instead risk lagging behind the technological frontier.
Mentions: Marginal Revolution
I empirically investigate the trade-off between accuracy and interpretability in Medicare Advantage risk adjustment models. I introduce a formal metric for model complexity in payment policy, which equates complexity to the number of coefficients in a model, a factor central to stakeholder interpretation of payment rates. Machine learning models significantly improve prediction accuracy and robustness to upcoding but also dramatically increase complexity. An analysis of policymakers’ preferences reveals that these models likely do not justify their additional complexity. Future research should explore aligning machine learning advances with payment policy constraints.
The Art of Medicine as Economics: Modeling Clinical Tradeoffs in the Production of Health
Standard economic models assume that monetary costs are the primary constraint to the use of medical care. However, clinical medicine abounds with situations where the use of effective medical treatments is not constrained by monetary costs but by the negative side effects of treatments, which I refer to as “health costs”. Navigating these trade-offs is referred to clinically as “the art of medicine.” I model these trade-offs by making a simple but substantive change to standard economic models of healthcare consumption. Medical treatments have a health cost. Treatment improves health in one dimension but harms it in another, constraining healthcare use. Patients whose medical care is constrained by health costs are unresponsive to monetary price changes. The model provides further predictions about situations in which price will be an effective policy lever and in which moral hazard will be limited. It also provides economists with a framework for thinking about clinical tradeoffs, a central driver of patterns of healthcare consumption.