VA vs. Private Hospitals – Healthcare Economics

How efficient is patient care at Veterans Affairs hospitals compared to private hospitals? It is not easy to answer this question because the composition of patients varies between these hospitals. Even among dually qualified individuals—those with VA and commercial insurance—individuals treated at VA hospitals are generally more risky.

To better answer this question, a recent NBER paper was presented by Chan, Card and Taylor (2022) It uses a quasi-experimental design that investigates differences in hospital selection that occur due to the randomness of ambulance dispatches after the 911 emergency call. The authors use claims data from VA and Medicare to perform this analysis. Using this approach, they found the following:

Veterans who are instigated by an ambulance company to be treated at a Virginia hospital are 4.5 percentage points (46 percent) less likely to die within 28 days of boarding the ambulance…the total cost of care is $2,598 (21 percent) less at hospitals Virginia over the 28 days after the ambulance ride and this cumulative spending difference continues over time… Lower costs in Virginia hospitals reflect a different overall pattern of care including fewer days in the hospital, more outpatient care, and more phone calls.

Note that this study has high internal validity – the quasi-experimental design appears robust – but the external validity is less clear. Would victim assistance have better quality and lower cost for non-urgent care? This will be an interesting research question to investigate in the future.

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