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Fragmented Division of Labor and Healthcare Costs: Evidence from Moves Across Regions

Leila Agha, Brigham Frandsen, James B. Rebitzer

NBER Working Paper No. 23078
Issued in January 2017, Revised in November 2018
NBER Program(s):Aging, Health Care, Health Economics, Productivity, Innovation, and Entrepreneurship

Policies aiming to improve healthcare productivity often focus on reducing care fragmentation. Care fragmentation occurs when services are spread across many providers, potentially making coordination difficult. Using Medicare claims data, we analyze the effect of moving to a region with more fragmented care delivery. We find that 60% of regional variation in care fragmentation is independent of patients' individual demand for care and moving to a region with 1 SD higher fragmentation increases care utilization by 10%. When patients move to more fragmented regions, they increase their use of specialists and have fewer encounters with primary care physicians. More fragmented regions have more intensive care provision on many margins, including services sometimes associated with overutilization (hospitalizations, emergency department visits, repeat imaging studies) as well as services associated with high value care (vaccines, guideline concordant for diabetics).

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A non-technical summary of this paper is available in the 2017 number 2 issue of the NBER Bulletin on Aging and Health. You can sign up to receive the NBER Bulletin on Aging and Health by email.

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Document Object Identifier (DOI): 10.3386/w23078

Published: Leila Agha & Brigham Frandsen & James B. Rebitzer, 2019. "Fragmented division of labor and healthcare costs: Evidence from moves across regions," Journal of Public Economics, vol 169, pages 144-159. citation courtesy of

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