Estimating the costs of Hospital Acquired Infection

Hospital acquired infections (HAI) are a largely avoidable and costly burden on public health systems. Accurate estimates of the costs of HAI are necessary to gauge the cost efficiency of alternative infection control measures, but are traditionally very difficult to compute. In particular, existing studies of the costs of HAI do not take into account the possible endogeneity bias between the risk of HAI and the length of stay in the hospital, and thus may over-estimate costs. We propose a multi-stage instrumental variables estimation strategy that explictly controls for the endogeneity between risk and length of stay and find that a ten point reduction in ex ante risk of HAI results in an expected savings of $1,800. JEL Code: I10, I18