Healthcare Localization and Utilization: Does Supply Create Demand for Intensive Care?

In recent decades, neonatal intensive care units (NICUs) have proliferated, expanding from regional care centers to local community hospitals. The increase in NICU supply has been suggested as increasing intensive care admissions, especially for healthier newborns. In this study, we investigate whether the localization of NICUs leads to higher NICU admission rates. Our event study results suggest that higher county-level NICU supply increases county-level NICU admissions. The increase in admissions is highest for low birth weight newborns (a 2.5 percentage point increase), but there is still a noticeable increase for healthier newborns of normal birth weight (by 0.4-0.6 percentage points or 11-14%). While admission rates for the most at-risk newborns, those weighing less than 1,500 grams, remain unchanged, these very low birth weight newborns still benefit from the closer proximity to the NICU through lower mortality and higher Apgar scores. Our findings suggest that local NICU availability prevents neonatal mortality, but this comes at the expense of higher admission rates for healthier newborns.