Annetta Zhou

Annetta Zhou

Associate Policy Researcher, RAND Corporation

Dissertation Title:  "Essays on Insurance Policy and Provider Choices"This dissertation includes one essay on the role of reputation on patients' choice of providers, one on the effect of Medicaid expansion on hospital finances and strategy, and one observational study on the heterogeneity of provider site choices by insurance status.

Chapter One studies the information content of third-party awarded "top doctor" awards and examines the causal effect of these awards on patients' choice of surgeons and surgeons' practice patterns. I find that cardiac surgeons who have been winners of "top doctor" awards have risk-adjusted mortality rates for corollary bypass surgery procedures 0.15 standard deviations below the average cardiac surgeon. This holds true even conditional on other provider characteristics that may be publicly available, including experience, previous volume, the prestige of the hospital, and training background. I find no evidence that award-winning increased Medicare FFS inpatient or outpatient volume. There is small evidence that award-winning changed the share of a surgeon's patients who traveled from far-away by about 5%. Award-winning did increase the share of a surgeon's patients who were medically complex. I also find that winning a "top doctor" award more than doubled the likelihood that a cardiac surgeon or an orthopedic surgeon practiced at a specialty hospital. Overall, the results suggest that demand responses to "top doctor" awards are modest in the Medicare FFS market but likely exists in other markets.

Chapter Two studies the effect of the Medicaid expansion as part of the Affordable Care Act on hospital financial status and strategy. I found that Medicaid expansion as part of the Affordable Care Act increased Medicaid revenue and decreased the cost of uncompensated care. However, the increase in Medicaid revenue did not translate into increases in total revenue for private hospitals, suggesting that the financial gain from Medicaid expansion is offset in other channels. This offset does not exist in public hospitals, which experienced an increase in their total revenue as a result of the Medicaid expansion. I argue that these results are explained by a model where hospitals are risk-averse firms that incur nonmonetary "strategic search cost" when searching ways to improve their financial status. In this model, a Medicaid revenue gain decreases the marginal return of additional effort invested in generating revenue elsewhere and reduces the total amount of such effort, leading to an offset in total revenue. Consistent with the finding that Medicaid expansion only leads to an improvement in hospital's overall financial health for public hospitals, I found that public hospitals in Medicaid expansion states increased their salary expenditure and capital investment post-expansion. I found no evidence of an effect of Medicaid expansion on hospital expenditure, capital investment, or 30-day readmission or mortality rates of the Medicare population for private hospitals.

Chapter Three (with Katherine Baicker, Sarah Taubman, and Amy N. Finkelstein) addresses a common misperception that the uninsured use the ED more than the insured. We show that uninsured and insured adults use the ED at the same rate - and in very similar circumstances. The disconnect between this fact and widespread perceptions may be because uninsured adults use other forms of care, such as doctor visits and hospitalizations, substantially less. In other words, the uninsured are not more likely than the insured to use the ED, but the uninsured do get a disproportionate share of their care in the ED. These patterns should help inform ongoing discussions about health insurance reform.

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