Optimal Reimbursement Contracts for Provider Administered Treatments (job market paper)

This paper proposes a theoretical framework for designing insurer reimbursement contracts. There is little consensus among insurers on how to reimburse providers, suggesting that relevant contracting metrics are not well understood. My theory suggests that dispersion in treatment needs is a critical determinant for the efficiency of the payment system, explaining why prospective payment contracts may issue outlier payment adjustments. My model combines two elements that yield new theoretical results: provider altruism and unobserved patient heterogeneity. Provider altruism is a source of inefficient over-treatment, and treatment caps can efficiently contain overall health care delivery when patient benefits are unobservably disperse. Turning to linear schemes, I provide new reasons for why insurers may want partially retrospective reimbursements when there is patient heterogeneity. Finally, I propose a way to evaluate the optimality of payments using a sufficient statistics approach. In an empirical application to Medicare’s Outpatient Prospective Payment System, I find that Medicare payments for a small set of services is too prospective.

Effects of Private Equity Acquisition on Health Care Provision (with Rishab Guha and Sam Lite)

How does investor-driven consolidation in health care affect real outcomes? A substantial amount of consolidation in the health care industry has involved private equity funds acquiring and rolling up collections of small owner-operated practices, such as dental clinics. In this paper, we use the dental care industry to study the impact that this consolidation has had on the prices and provision of health care services. By matching insurance claims data with information on private equity acquisitions, we show that private equity ownership increases both clinic revenue from reimbursements and the volume of procedures clinicians perform, and that these increases overwhelmingly come from the extensive margin. Further, we show heterogeneity in these effects across the types of procedures clinicians perform.

In Progress:

Effects of the Medicare Part B Reimbursement Formula on Pharmaceutical Pricing (with Grace McCormack)

Reconciling Mixed Evidence on Physician Induced Demand (with Grace McCormack)