Capacity Rationing in Primary Care: Provider Availability Shocks and Channel Diversion

Abstract

We study capacity rationing by servers facing differentiated customer classes using data from the Veterans Health Administration, which is the largest integrated healthcare system in the U.S. Using more than 11 million health encounters over two years in which the system was capacity constrained, our study provides a comprehensive analysis of the impacts of provider availability shocks on care channel diversion and delays. The outcomes studied include emergency room (ER) visits broken down by type, urgent care center visits, office and phone visits with one’s own versus another provider, post-ER follow-up visits, and ER readmissions. Availability shocks in our analysis are a residualized measure characterizing weeks in which the provider has fewer (or more) office appointments than expected based on typical patterns. The main finding is that moving from two standard deviations above to two standard deviations below in availability shocks increases ER visits by 2.4%, or about 20,000 yearly ER visits. Interestingly, the increase in ER visits is only present for the non-emergent category, indicating differentiated service to emergent and non-emergent care requests; capacity-constrained providers still tend to the patients in most need. Another finding is that provider availability shocks delay and divert post-ER follow-up care. Yet there is no effect on ER readmissions, a severe outcome of delayed or foregone follow-up, indicating that providers ration by priority these follow-up appointments. This paper was accepted by Vishal Gaur, operations management.