Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.
Is foreign direct investment good for health in low and middle income countries? An instrumental variable approach. Social Science & Medicine [PubMed] Published 28th March 2017
Foreign direct investment (FDI) is considered a key benefit of globalisation in the economic development of countries with developing economies. The effect FDI has on the population health of countries is less well understood. In this paper, the authors draw from a large panel of data, primarily World Bank and UN sources, for 85 low and middle income countries between 1974 and 2012 to assess the relationship between FDI and population health, proxied by life expectancy at birth, as well as child and adult mortality data. They explain clearly the problem of using basic regression analysis in trying to explain this relationship, given the problem of endogeneity between FDI and health outcomes. By introducing two instrumental variables, using grossed fixed capital formation and volatility of exchange rates in FDI origin countries, as well as controlling for GDP per capita, education, quality of institutions and urban population, the study shows that FDI is weakly statistically associated with life expectancy, estimated to amount to 4.15 year increase in life expectancy during the study period. FDI also appears to have an effect on reducing adult mortality, but a negligible effect on child mortality. They also produce some evidence that FDI linked to manufacturing could lead to reductions in life expectancy, although these findings are not as robust as the other findings using instrumental variables, so they recommend this relationship between FDI type and population health to be explored further. The paper also clearly shows the benefit of robust analysis using instrumental variables, as the results without the introduction of these variables to the regression would have led to misleading inferences, where no relationship between life expectancy and FDI would have been found if the analysis did not adjust for the underlying endogeneity bias.
Uncovering waste in US healthcare: evidence from ambulance referral patterns. Journal of Health Economics [PubMed] Published 22nd March 2017
This study looks to unpick some of the reasons behind the estimated waste in US healthcare spending, by focusing on mortality rates across the country following an emergency admission to hospital through ambulances. The authors argue that patients admitted to hospital for emergency care using ambulances act as a good instrument to assess hospital quality given the nature of emergency admissions limiting the selection bias of what type of patients end up in different hospitals. Using linear regressions, the study primarily measures the relationship between patients assigned to certain hospitals and the 90-day spending on these patients compared to mortality. They also consider one-year mortality and the downstream payments post-acute care (excluding pharmaceuticals outside the hospital setting) has on this outcome. Through a lengthy data cleaning process, the study looks at over 1.5 million admissions between 2002-2011, with a high average age of patients of 82 who are predominantly female and white. Approximately $27,500 per patient was spent in the first 90 days post-admission, with inpatient spending accounting for the majority of this amount (≈$16,000). The authors argue initially that the higher 90-day spending in some hospitals only produces modestly lower mortality rates. Spending over 1 year is estimated to cost more than $300,000 per life year, which the authors use to argue that current spending levels do not lead to improved outcomes. But when the authors dig deeper, it seems clear there is an association between hospitals who have higher spending on inpatient care and reduced mortality, approximately 10% lower. This leads to the authors turning their attention to post-acute care as their main target of reducing waste and they find an association between mortality and patients receiving specialised nursing care. However, this target seems somewhat strange to me, as post-acute care is not controlled for in the same way as their initial, insightful approach to randomising based on ambulatory care. I imagine those in such care are likely to be a different mix from those receiving other types of care post 90 days after the initial event. I feel there really is not enough to go on to make recommendations about specialist nursing care being the key waste driver from their analysis as it says nothing, beyond mortality, about the quality of care these elderly patients are receiving in the specialist nurse facilities. After reading this paper, one way I would suggest in reducing inefficiency related to their primary analysis could be to send patients to the most appropriate hospital for what the patient needs in the first place, which seems difficult given the complexity of the private and hospital provided mix of ambulatory care offered in the US currently.
Population health and the economy: mortality and the Great Recession in Europe. Health Economics [PubMed] Published 27th March 2017
Understanding how economic recessions affect population health is of great research interest given the recent global financial crisis that led to the worst downturn in economic performance in the West since the 1930s. This study uses data from 27 European countries between 2004 and 2010 collected by WHO and the World Bank to study the relationship between economic performance and population health by comparing national unemployment and mortality rates before and after 2007. Regression analyses appropriate for time-series data are applied with a number of different specifications applied. The authors find that the more severe the economic downturn, the greater the increase in life expectancy at birth. Additional specific health mortality rates follow a similar trend in their analysis, with largest improvements observed in countries where the severity of the recession was the highest. The only exception the authors note is data on suicide, where they argue the relationship is less clear, but points towards higher rates of suicide with greater unemployment. The message the authors were trying to get across in this study was not very clear throughout most of the paper and some lay readers of the abstract alone could easily be misled in thinking recessions themselves were responsible for better population health. Mortality rates fell across all six years, but at a faster rate in the recession years. Although the results appeared consistent across all models, question marks remain for me in terms of their initial variable selection. Although the discussion mentions evidence that suggests health care may not have a short-term effect on mortality, they did not consider any potential lagged effect record investment in healthcare as a proportion of GDP up until 2007 may have had on the initial recession years. The authors rule out earlier comparisons with countries in the post-Soviet era but do not consider the effect of recent EU accession for many of the countries and more regulated national policies as a consequence. Another issue is the potential of countries’ mortality rates to improve, where countries with existing lower life expectancy have more room for moving in the right direction. However, one interesting discussion point raised by the authors in trying to explain their findings is the potential impact of economic activity on pollution levels and knock-on health impacts from this (and to a lesser extent occupational health levels), that may have some plausibility in better mortality rates linked to physical health during recessions.
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