Working Papers
The Cost of Clarity: Tradeoffs to Public Investments in Rural Diagnostic Care (Job Market Paper)
Abstract
Rural hospitals face financial constraints that hinder investment in new medical technologies. Disinvestment contributes to regional disparities in health care quality, particularly in capital-intensive service lines like imaging, where reliance on outdated equipment increases the risk of diagnostic errors. To address access gaps, recent policy efforts have funded investment subsidies for rural hospitals. By expanding access to advanced medical technologies, these policies can meaningfully improve clinical outcomes for underserved rural populations. However, housing high-cost technologies at low-volume rural hospitals may not be cost-effective. This paper examines the cost-access trade-off associated with deploying expensive diagnostic equipment in rural markets by studying the diffusion of 3D-mammography (3DM). My analysis focuses on the market for breast cancer screenings in rural Georgia, where a subsidy for rural hospitals alleviated financial constraints, facilitating the adoption of 3DM. Leveraging changes in geographic access to 3DM over time, I demonstrate how distance to 3DM affects patients' technology choices and screening outcomes. Following the adoption of 3DM at a rural hospital, I estimate a 45 percentage-point increase in the probability that local patients will screen with 3DM rather than 2D mammography (2DM). Increased 3DM uptake improves local screening outcomes, reducing the average likelihood of a false-positive screening by 1.8 percentage points (21 percent). To study the effect of subsidized technology adoption, I estimate a structural model of demand for mammography. Counterfactual analyses show that a blanket investment policy funding 3DM upgrades at every rural hospital is inefficient, leading to over-investment in high-access markets where adoption is socially redundant or in sparsely populated markets that cannot sustain sufficient demand. Welfare is maximized by a targeted investment policy that allocates 3DM scanners to hospitals operating in midsize markets where patients are geographically isolated from incumbent 3DM providers.
Presented at
-ASHEcon, Emerging Scholars Session: Economics of Hospital Care (2025)
-Atlanta/Athens Health Economists Job Candidate Conference (2025)
-SEA, Health Economics Session (2025)