The Role of Hospital Heterogeneity in Measuring Marginal Returns to Medical Care: A Reply to Barreca, Guldi, Lindo, and Waddell

Abstract

In Almond et al. (2010) , we describe how marginal returns to medical care can be estimated by comparing patients on either side of diagnostic thresholds. Our application examines at-risk newborns near the very low birth weight threshold at 1500 g. We estimate large discontinuities in medical care and mortality at this threshold, with effects concentrated at “low-quality” hospitals. Although our preferred estimates retain newborns near the threshold, when they are excluded the estimated marginal returns decline, although they remain large. In low-quality hospitals, our estimates are similar in magnitude regardless of whether these newborns are included or excluded.