Michael Richards, Cornell University

Capital investments can enhance productivity and/or efficiency but also require high fixed costs. Financial uncertainty may therefore restrain firm investment. We study this in the context of healthcare where technology adoption often lags other economic sectors. We specifically examine how hospitals’ capital expenditures (“capex”) respond to Medicaid expansions. We find that greater public insurance coverage––and hence lower uncompensated care burden––increases hospitals’ purchases of clinical- and business-focused technologies. The effects begin during policy announcement and grow over time. Our heterogeneity analyses coupled with examinations of other hospital spending margins suggest that an improved, more predictable financial position drives investment.

DATE: Friday, October 11, 2024

TIME: 3:30-5:00 p.m.

LOCATION: Fronczak 444