The Impact of Health Care Financing on Research Outcomes: Evidence from Academic Medical Centers

Abstract:

Academic medicine—comprising medical schools, teaching hospitals, and their affiliated teaching physicians, residents, and students—plays an important role in the American system of biomedical research and innovation. This paper considers how changes in the level of health care financing affect research productivity within academic medical centers (AMCs). We examine the role of the Balanced Budget Act of 1997, which changed the formula used to reimburse Medicare inpatient claims and teaching hospital subsidies, on research outcomes within AMCs. We compare AMCs' relative exposure to the reform and how these differences affect their researchers' ability to attract scientific grant funding and produce scientific publications. Further, we examine heterogeneity across principal investigator types, grant novelty, and publication type. We find that in response to the BBA, research activity falls by 4 percent among the average teaching hospital and nearly 7 percent among major teaching hospitals. We find little evidence of a concurrent change in clinical outcomes. Our estimates offer insight into how changes in reimbursements to health care providers can shape the rate and direction of scientific progress within biomedical research.

Last updated on 07/08/2019