Capacity and Utilization in Health Care: The Effect of Empty Beds on Neonatal Intensive Care Admission

Abstract

Because geographic variation in medical care utilization is jointly determined by both supply and demand, it is difficult to empirically estimate whether capacity itself has a causal impact on utilization in health care. In this paper, I exploit short-term variation in Neonatal Intensive Care Unit (NICU) capacity that is unlikely to be correlated with unobserved demand determinants. I find that available NICU beds have little to no effect on NICU utilization for the sickest infants, but do increase utilization for those in the range of birth weights where admission decisions are likely to be more discretionary.

Figure 1

Aggregate Trends in NICU Capacity and Utilization Note: This figure plots the annual number of total NICU beds and total patients discharged from NICUs in each state. The number of beds is measured on the left-hand-side axis, while NICU discharges are measured on the right-hand-side axis. Source: Statistics are calculated from the California State Utilization Data File of Hospitals and the New York Institutional Cost Reports.

Figure 2

Effect of Empty Beds on NICU Admission by Birth Weight Note: Panel A plots coefficient estimates and 95% confidence intervals from separate regressions of NICU admission on the number of empty beds the day before birth for samples stratified by birth weight in 250-gram increments. Specifications include all control variables described in the notes to Table 3, including hospital-specific month fixed effects. All standard errors are clustered at the hospital level. Panel B plots these coefficient estimates divided by the NICU admission rate of each birth weight subgroup.