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Saving lives by tying hands: the unexpected effects of constraining health care providers

IFS Working Paper NBER Working Paper No. 24445

The emergency department (ED) is a complex node of healthcare delivery that is facing market and regulatory pressure across developed economies to reduce wait times. In this paper we study how ED doctors respond to such incentives, by focusing on a landmark policy in England that imposed strong incentives to treat ED patients within four hours. Using bunching techniques, we estimate that the policy reduced affected patients’ wait times by 19 minutes, yet distorted a number of medical decisions. In response to the policy, doctors increased the intensity of ED treatment and admitted more patients for costly inpatient care. We also find a striking 14% reduction in mortality. To determine the mechanism behind these health improvements, we exploit heterogeneity in patient severity and hospital crowding, and find strongly suggestive evidence that it is the reduced wait times, rather than the additional admits, that saves lives. Overall we conclude that, despite distorting medical decisions, constraining ED doctors can induce cost-effective reductions in mortality.

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