So Close Yet So Far? – Estimating the Relationship Between Distance and Hospital Utilization Using Road Closures
Distance to healthcare services is a major influence on healthcare utilization. However, measuring its actual impact proves difficult because the location of healthcare facilities and place of residence are highly endogenous. This paper presents new exogenous variation to isolate this relationship: closures of German highways (Autobahnen). They are implemented using a fixed-effects model with administrative data from a large German health insurance company. Results indicate that the closures lead to significant changes in driving times and that inpatient utilization reacts with an elasticity of around −0.15%. This is much smaller than the overall correlation (−0.86%), but still of relevant size. Distance to a hospital is therefore, by itself, an important factor for its utilization, even if its impact is smaller than the overall correlation might suggest. Patients rather switch to different hospitals than forgo inpatient care or substitute it with primary care. Individuals living in rural areas or in areas with low purchasing power are the most sensitive to changes in driving times.