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Start spreading the news: A structural estimate of the effects of New York hospital report cards

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Author Info

  • Dranove, David
  • Sfekas, Andrew

Abstract

Research on the effects of publicly reported hospital quality report cards on patient market shares is mixed. Higher-ranking hospitals do not consistently experience increases in market share. We argue that this may be because the report cards do not always convey "news" about quality; in some cases the rankings conform with prior beliefs about quality. We develop a structural model of the "news" in report cards and estimate the model using data from New York State in 1989-1991. We show hospitals with negative news in the original 1990 report cards experienced a decrease in market share, but that a misspecified model might continue to find no report card effect.

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File URL: http://www.sciencedirect.com/science/article/B6V8K-4S2F5GS-2/2/1849d967ff7ac66c7f4ce3c3f56c4e20
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 27 (2008)
Issue (Month): 5 (September)
Pages: 1201-1207

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Handle: RePEc:eee:jhecon:v:27:y:2008:i:5:p:1201-1207

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Web page: http://www.elsevier.com/locate/inca/505560

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References

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  1. David M. Cutler & Robert S. Huckman & Mary Beth Landrum, 2004. "The Role of Information in Medical Markets: An Analysis of Publicly Reported Outcomes in Cardiac Surgery," NBER Working Papers 10489, National Bureau of Economic Research, Inc.
  2. Friedman, Bernard & Pauly, Mark, 1981. "Cost Functions for a Service Firm with Variable Quality and Stochastic Demand: The Case of Hospitals," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 620-24, November.
  3. Jin, Ginger Zhe & Sorensen, Alan T., 2006. "Information and consumer choice: The value of publicized health plan ratings," Journal of Health Economics, Elsevier, vol. 25(2), pages 248-275, March.
  4. Scanlon, Dennis P. & Chernew, Michael & McLaughlin, Catherine & Solon, Gary, 2002. "The impact of health plan report cards on managed care enrollment," Journal of Health Economics, Elsevier, vol. 21(1), pages 19-41, January.
  5. Cutler, David & Landrum, Mary Beth & Huckman, Robert, 2004. "The Role of Information in Medical Markets: An Analysis of Publicly Reported Outcomes in Cardiac Surgery," Scholarly Articles 2640582, Harvard University Department of Economics.
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Citations

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Cited by:
  1. Luigi Siciliani & Odd Rune Straume & Roberto Cellini, . "Quality competition with motivated providers and sluggish demand," Discussion Papers 11/09, Department of Economics, University of York.
  2. Varkevisser, Marco & van der Geest, Stéphanie A. & Schut, Frederik T., 2012. "Do patients choose hospitals with high quality ratings? Empirical evidence from the market for angioplasty in the Netherlands," Journal of Health Economics, Elsevier, vol. 31(2), pages 371-378.
  3. Jung, Kyoungrae & Feldman, Roger & Scanlon, Dennis, 2011. "Where would you go for your next hospitalization?," Journal of Health Economics, Elsevier, vol. 30(4), pages 832-841, July.
  4. Epstein, Andrew J., 2010. "Effects of report cards on referral patterns to cardiac surgeons," Journal of Health Economics, Elsevier, vol. 29(5), pages 718-731, September.
  5. Powell, Philip T. & Laufer, Ron, 2010. "The promises and constraints of consumer-directed healthcare," Business Horizons, Elsevier, vol. 53(2), pages 171-182, March.
  6. Justin Wang & Jason Hockenberry & Shin-Yi Chou & Muzhe Yang, 2010. "Do Bad Report Cards Have Consequences? Impacts of Publicly Reported Provider Quality Information on the CABG Market in Pennsylvania," NBER Working Papers 16225, National Bureau of Economic Research, Inc.
  7. van de Ven, Wynand P.M.M. & Beck, Konstantin & Buchner, Florian & Schokkaert, Erik & Schut, F.T. (Erik) & Shmueli, Amir & Wasem, Juergen, 2013. "Preconditions for efficiency and affordability in competitive healthcare markets: Are they fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland?," Health Policy, Elsevier, vol. 109(3), pages 226-245.
  8. Jonathan T. Kolstad, 2013. "Information and Quality when Motivation is Intrinsic: Evidence from Surgeon Report Cards," NBER Working Papers 18804, National Bureau of Economic Research, Inc.
  9. David Dranove & Ginger Zhe Jin, 2010. "Quality Disclosure and Certification: Theory and Practice," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 935-63, December.
  10. Werner, Rachel M. & Norton, Edward C. & Konetzka, R. Tamara & Polsky, Daniel, 2012. "Do consumers respond to publicly reported quality information? Evidence from nursing homes," Journal of Health Economics, Elsevier, vol. 31(1), pages 50-61.
  11. Dwyer, Debra Sabatini & Liu, Hong, 2013. "The impact of consumer health information on the demand for health services," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(1), pages 1-11.
  12. Roger Feldman & Kyoungrae Jung, 2012. "Testing the Hirshleifer–Riley Model: The Values of Information Sources for a Future Hospital Stay," Journal of Consumer Policy, Springer, vol. 35(3), pages 355-371, September.
  13. Jonathan T. Kolstad, 2013. "Information and Quality When Motivation Is Intrinsic: Evidence from Surgeon Report Cards," American Economic Review, American Economic Association, vol. 103(7), pages 2875-2910, December.

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