On-the-job Treating: Patient Response to a Reduction in Time Cost through Worksite Health

Innovative organizational forms of health care delivery have recently developed that lower the time cost of care. While there is an extensive literature on consumer response to changes in the out-of-pocket price for care, little work has studied the equally-salient dimension of time cost. In this paper, I develop a theoretical model of patient decision-making and predict that when a new provider enters the market and offers services with lower time cost, patients engage in new utilization and/or substitution across providers. I then test these predictions in a unique empirical setting: A large corporation opened a worksite health clinic on its California campus in 2013, but did not feature a clinic on its Texas campus. I utilize novel data, 2011-2015 medical claims for the corporation’s employees. My primary empirical strategy is a difference-in-differences approach, where I compare California employees to the control group of Texas employees. I find that the effects of clinic availability are concentrated among the narrow set of services that can be provided onsite. For primary care in particular, I observe both an increase in utilization and substitution towards onsite care. While services beyond the clinic’s scope of practice are mostly unaffected, California employees reduce their utilization of outpatient care; this spillover effect is offset by a substantial increase in demand for office-based care. Ultimately, new consumption of primary care and other office-based services drives a small increase in spending. For example, at the 70^th percentile of the conditional distribution, the estimated increase in monthly total spending is $14.67. My findings suggest that consumer demand is sensitive to changes in time cost, and this has important implications for the potential welfare benefits of providing patients with convenient access to high-value services.