Problem definition: A key choice in operational decision making is whether to collocate services. Although prior work has highlighted the benefits of collocation, these benefits may need to be balanced with potential costs. Thus, it is critical to understand not just whether collocation matters, but also when and for whom. We consider collocation in the context of healthcare and ask: Does collocation of mental and physical health resources improve outcomes? This is important, as primary care serves as a gateway to address mental health concerns. We next study collocation’s relationship with patient complexity and with three social risk factors: age, race, and income. Finally, we investigate two pathways through which collocation impacts outcomes. Methodology/results: As America’s largest integrated healthcare system, the Veterans Health Administration offers an excellent setting to investigate these questions. We empirically analyze more than 112,000 patients—over an 11-year period—who suffer from chronic conditions and show evidence of mental illness. We find that collocation is associated with improvement in four key outcomes: hospitalizations, length of stay (LOS), 30-day readmissions, and suicidal behavior. For example, a one-standard-deviation increase in collocation is related to a 3.4% average reduction in LOS, roughly equivalent to a savings of $3.6 million annually, just for our cohort, with the majority of the savings coming from severely ill patients. Further, collocation benefits patients who are younger, are non-Hispanic Blacks, and those with low incomes. Finally, our analysis reveals that collocation improves outcomes (partially) through a reduction in no-shows and an increase in medication adherence. Managerial implications: Our work demonstrates the importance of collocation as a strategic operational lever and offers insights into where to target collocation and, broadly, how to design an operationally efficient system. Theoretically, we advance the location literature, emphasize task complexity as a key moderator, and highlight collocation’s value in addressing health/social inequities. Funding: C. A. Alvarez received research support from the National Center for Advancing Translational Sciences of the National Institutes of Health [Award UL1 TR003163]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2023.0662 .

The U.S. Food and Drug Administration (FDA) regulates the approval and safe public use of pharmaceutical products in the United States. The FDA uses postmarket surveillance systems to monitor drugs already on the market; a drug found to be associated with an increased risk of adverse events (ADEs) is subject to a recall or a warning. A flawed postmarket decision-making process can have unintended consequences for patients, create uncertainty among providers and affect their prescribing practices, and subject the FDA to unfavorable public scrutiny. The FDA’s current pharmacovigilance process suffers from several shortcomings (e.g., a high underreporting rate), often resulting in incorrect or untimely decisions. Thus, there is a need for robust, data-driven approaches to support and enhance regulatory decision making in the context of postmarket pharmacovigilance. We propose such an approach that has several appealing features—it employs large, reliable, and relevant longitudinal databases; it uses methods firmly established in literature; and it addresses selection bias and endogeneity concerns. Our approach can be used to both (i) independently validate existing safety concerns relating to a drug, such as those emanating from existing surveillance systems, and (ii) perform a holistic safety assessment by evaluating a drug’s association with other ADEs to which the users may be susceptible. We illustrate the utility of our approach by applying it retrospectively to a highly publicized FDA black box warning (BBW) for rosiglitazone, a diabetes drug. Using comprehensive data from the Veterans Health Administration on more than 320,000 diabetes patients over an eight-year period, we find that the drug was not associated with the two ADEs that led to the BBW, a conclusion that the FDA evidently reached, as it retracted the warning six years after issuing it. We demonstrate the generalizability of our approach by retroactively evaluating two additional warnings, those related to statins and atenolol, which we found to be valid. This paper was accepted by Vishal Gaur, operations management.