LAUSR

We add a new angle to the debate on whether greater healthcare spending is associated with better outcomes, by focusing on the link between the size of the physician workforce at the ward level and healthcare results. Drawing on standard organization theories, we proposed that due to organizational limitations, the relationship between physician workforce size and medical performance is hump-shaped. Using a sample of 150 U.S. university departments across three specialties that record measures of clinical scores, as well as a rich set of covariates, we found that the relationship was indeed hump-shaped. At the two extremes, departments with an insufficient (excessive) number of physicians may gain a substantial increase in healthcare quality by the addition (dismissal) of a single physician. The marginal elasticity of healthcare quality with respect to the number of physicians, although positive and significant, was much smaller than the marginal contribution of other factors. Moreover, research quality conducted at the ward level was shown to be an important moderator. Our results suggest that studying the relationship between the number of physicians per bed and the quality of healthcare at an aggregate level may lead to bias. Framing the problem at the ward-level may facilitate a better allocation of physicians.