10:00 - 11:30am (Wednesday)

RM 606, School of Economics

Host: Yuan Ye, Assistant Professor

While extensive literature has documented that air pollution harms patient’s health and increases medical spending, little is known to what extent do such effects operate through air pollution affecting physician’s performance. Using administrative data of hospital admissions of chronic kidney disease in all tertiary hospitals in China from 2015 to 2019, we conduct the first study to investigate the causal effect of air pollution on physician performance, and estimate to what extent air pollution affects patient’s treatment outcomes through its effect on physician’s performance. Based on the sample of inpatients who travelled to a distant city for hospital admission, we find that severe air pollution in the hospital city before the patient’s admission significantly increases patient’s length of stay and total medical spending, but has little effect on patients’ mortality or revisit rate. The increase in medical spending is driven mainly by that in invasive procedures. We find that the effect of severe air pollution on physician’s choice of conducting invasive procedure exhibits an inverse-U shape across the distribution of patients’ appropriateness for such procedures. In contrast, the effect on medicine spending exhibits a U-shape across the same distribution of appropriateness index. Finally, based on the matched sample of patients who were treated in their residential city, we estimate that 40% of the effect of air pollution on patient’s health outcomes can be explained by the effect of air pollution on physician performance.