Institutions and Markets
Prices and Quality of Care in the U.S. Hospital Market
Rising prices in the U.S. hospital market could stem from multiple factors, including the clustering of healthcare providers, hospital consolidation, or the willingness of patients to pay for quality of care. In the Journal of Health Economics, IPR associates healthcare economist Craig Garthwaite and strategy professor Amanda Starc and Christopher Ody investigate the relationship between hospital prices and quality. They look at the quality investments hospitals make and their effects on revenue. The researchers examined over 2,200 general acute care hospitals that filed Medicare’s Hospital Cost reports for 2012, using demographic data from the American Community Survey (ACS) and the 2010 Census to estimate the share of patients at each hospital with private insurance, public insurance, or who were uninsured. The authors measured quality as a combination of factors, including emergency wait time, technology adoption, and a composite of Medicare Hospital Compare scores that integrates outcome measures, process measures, and patient experience scores. The study finds that hospitals with a higher share of potential patients who are privately insured perform better on quality measures, which implies that hospitals are investing in quality if they are more likely to serve privately insured patients, who pay higher prices than Medicare. These results suggest that changes to Medicare reimbursement policies will affect hospitals’ decisions about quality, and that there may be a quality tradeoff if policies such as Medicare for All or broader public options are adopted. Garthwaite is the Herman Smith Research Professor in Hospital and Health Services Management.
Enrollment Changes at Community Colleges During the Pandemic
During typical recessions, post-secondary institutions experience an increase in enrollment as young adults try to gain skills to be more competitive in the labor market. In a working paper, IPR economist Diane Whitmore Schanzenbach and Sarah Turner, of the University of Virginia, study how supply disruptions led to a drop in community college enrollment during the pandemic-induced recession, despite high unemployment rates. The researchers examine community college administrative records in fall 2020 representing about half of national community college enrollment. The researchers focused on assembly, repair, and maintenance (ARM) courses that require hands-on training, which were particularly disrupted during COVID because the training was harder to move online. Overall, they find that between 2019 and 2020, enrollment at community colleges dropped by 9.5%, mostly because fewer men enrolled. Furthermore, community colleges that typically enroll a higher share of students in ARM programs saw a larger drop in enrollment compared to other schools. The researchers suggest that because fewer workers have been trained in ARM skills, the flow of workers to local markets may be disrupted. This disruption could also encourage hands-on programs to adopt a hybrid model of teaching in the future using simulation technologies and learning tools to save money and allow for self-paced learning. Schanzenbach is the Margaret Walker Alexander Professor of Human Development and Social Policy.