The Spillover Effects of Capacity Pooling in Hospitals

Abstract

Off-service placement is a common capacity pooling strategy that hospitals utilize to address mismatches in supply and demand that arise from the day-to-day variation in patient demand. This strategy involves placing patients in a bed in a unit that is designated for another specialty service. Building on prior work that documents the negative first-order effects of off-service placement on patients who are placed off service themselves, we quantify the spillover effects of this practice on patients who are actually placed on service. Using an instrumental variables approach, we find that patients placed on service experience a substantial spillover effect of off-service placement, manifesting as a longer length of stay, a higher likelihood of hospital readmission, and a higher likelihood of clinical trigger activation. Our analyses show it is not only the average level of off-service placement, but also the volatility of off-service placement, that contributes to this spillover effect. Through a series of counterfactual analyses, we propose alternate routing policies that could meaningfully improve outcomes around the efficiency and quality of care in the inpatient setting.