Hospital Volume and Quality of Care: Selective-referral or Practice-makes-perfect?

Physicians in hospitals that treat a large number of patients will gain experience about the most effective treatment methods. One would expect this expertise to be reflected in better health outcomes for these patients (practice-makes-perfect hypothesis). However, using observational data, a selection bias arises since patients prefer the perceived “better” quality hospital, creating a spurious correlation between volume and outcomes (selective-referral hypothesis). In this study, using data from the Cooperative Cardiovascular Project (CCP), we estimate the effect of hospital volume on quality of care for patients with acute myocardial infarction (AMI). Our main instrument is the differential distance between the closest hospital to the patient and the nearest high volume hospital. Hospital volume is measured by the number of AMI patients admitted to the hospital in the year prior to the patient’s admission. We conclude that after controlling for selective-referrals admission to a higher hospital volume leads only to small reductions in mortality and higher readmission rates for urban patients. JEL classification: I1, L1