Do Health Professional Shortage Areas Improve Primary Care for Medicare Beneficiaries?

Expanding access to primary health care is a longstanding objective of government policy. One persistent impediment to access is the relative scarcity of primary care physicians and other health care professionals in rural and low-income urban areas. In response, numerous federal programs have been administered over several decades to attract health professionals to regions where they are otherwise scarce. These programs have been expanded considerably in recent years. Areas to be targeted under the programs are designated as Health Professional Shortage Areas (HPSAs). I estimate the effect of HPSA designation on the rate of ambulatory care sensitive hospitalizations (ACSH), a measure of the effectiveness of local primary care for which a lower value suggests better care. I calculate ACSH rates at the county level using data on all hospital stays of Medicare fee-for-service beneficiaries between 2003 and 2012. Because HPSA designation must be applied for through a burdensome application process, designation may be endogenous to unobserved attributes of the local health care system. Results from a fixed effects and paired event study specification indicate selection bias, so in my main specification I estimate the effect of HPSA designation on ACSH by fuzzy regression discontinuity, exploiting a cutoff in the HPSA eligibility criteria. I find that designation substantially reduces hospitalizations for acute ambulatory care sensitive conditions. Designation might reduce ACSH for chronic conditions as well, but those findings are statistically insignificant. I then test whether HPSA designation affects measures of primary care utilization, provider availability, Medicare reimbursements, and process of care. I find no effect of HPSA designation on any of these outcomes. This, together with a number of empirical challenges related to the institutional complexity of the HPSA program, argues for caution before using the large point estimates in cost-benefit analysis. Nevertheless, the analysis in this paper is a first step in providing evidence of the effectiveness of the HPSA program.