Chen, Julius Lanhuei

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  • Publication
    On-The-Job Treating: Patient Response To A Shock In Primary Care Access At The Workplace
    (2016-01-01) Chen, Julius Lanhuei
    Time cost is a salient determinant of the demand for medical care. Over the past two decades, innovative organizational forms of health care delivery that lower the time cost of basic care have emerged and widely grown in popularity. Therefore, it is important to understand what might happen on the demand side when a new provider enters the market for medical care and offers services at a lower time cost to consumers. Economic theory predicts that market expansion and/or business stealing can occur. In my dissertation, I test for these effects in a unique empirical setting where entry of a low-time cost provider occurred: A large, self-insured corporation opened a worksite health clinic on its California campus in 2013 but did not feature a clinic on its Texas campus. I utilize a novel data set, 2011-2015 medical claims data for the corporation’s employees and their covered dependents. My primary empirical strategy is a difference-in-differences approach, whereby I construct a suitable control group by leveraging the fact that Texas-based employees were never exposed to worksite clinic availability. Overall, I find that market entry by the clinic only impacted utilization and spending for a narrow set of services (i.e. services that were available onsite), and these effects were concentrated among the subset of employees that actually used the clinic. After the clinic opened, patients did engage in some substitution, as they shifted certain services away from outpatient settings and towards the clinic. At the same time, there was a substantial amount of new utilization; patients significantly increased their demand for primary care office visits, physical therapy, and alternative medicine. This consumption of new services consequently drove an increase in total spending, particularly among patients who generally utilized a modest amount of care.