Should I Stay or Should I Go? Hospital Emergency Department Waiting Times and Demand
Melbourne Institute Working Paper No. 13/16
In the absence of the price mechanism hospital emergency departments rely on waiting times, alongside prioritisation mechanisms, to restrain demand and clear the market. This paper aims to estimate the relationship between waiting times and demand: by how much is the number of treatments demanded reduced by a higher waiting time, other things equal? I use variation in waiting times for low-urgency patients caused by rare and resource-intensive high-urgency patients to estimate the relationship. I find that when waiting times are higher, more low-urgency patients are deterred from treatment and leave the hospital during the waiting period without being treated. The waiting time elasticity of demand for low-urgency patients is approximately -0.25, and is highest for the lowest-urgency patients and when more substitute forms of care are available. The results imply waiting times play a substantial role in reducing demand from low-urgency patients and large increases in hospital capacity will be necessary to reduce emergency department waiting times.