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Do patients choose hospitals with high quality ratings? Empirical evidence from the market for angioplasty in the Netherlands

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  • Varkevisser, Marco
  • van der Geest, Stéphanie A.
  • Schut, Frederik T.
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    Abstract

    A necessary condition for competition to promote quality in hospital markets is that patients are sensitive to differences in hospital quality. In this paper we examine the relationship between hospital quality, as measured by publicly available quality ratings, and patient hospital choice for angioplasty using individual claims data from a large health insurer. We find that Dutch patients have a high propensity to choose hospitals with a good reputation, both overall and for cardiology, and a low readmission rate after treatment for heart failure. Relative to a mean readmission rate of 8.5% we find that a 1%-point lower readmission rate is associated with a 12% increase in hospital demand. Since readmission rates are not adjusted for case-mix they may not provide a correct signal of hospital quality. Insofar patients base their hospital choice on such imperfect quality information, this may result in suboptimal choices and risk selection by hospitals.

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    Bibliographic Info

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

    Volume (Year): 31 (2012)
    Issue (Month): 2 ()
    Pages: 371-378

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    Handle: RePEc:eee:jhecon:v:31:y:2012:i:2:p:371-378

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

    Related research

    Keywords: Hospital demand; Patient choice; Quality ratings; Quality competition;

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    References

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    1. Pope, Devin G., 2009. "Reacting to rankings: Evidence from "America's Best Hospitals"," Journal of Health Economics, Elsevier, vol. 28(6), pages 1154-1165, December.
    2. Howard David H, 2006. "Quality and Consumer Choice in Healthcare: Evidence from Kidney Transplantation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-22, January.
    3. David Dranove & Daniel Kessler & Mark McClellan & Mark Satterthwaite, 2002. "Is More Information Better? The Effects of 'Report Cards' on Health Care Providers," NBER Working Papers 8697, National Bureau of Economic Research, Inc.
    4. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
    5. 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.
    6. Tay, Abigail, 2003. " Assessing Competition in Hospital Care Markets: The Importance of Accounting for Quality Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 786-814, Winter.
    7. Arne Risa Hole, 2007. "Fitting mixed logit models by using maximum simulated likelihood," Stata Journal, StataCorp LP, vol. 7(3), pages 388-401, September.
    8. Meijer, E. & Rouwendal, J., 2000. "Measuring welfare effects in models with random coefficients," Research Report 00F25, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    9. Dana Goldman & John A. Romley, 2008. "Hospitals As Hotels: The Role of Patient Amenities in Hospital Demand," NBER Working Papers 14619, National Bureau of Economic Research, Inc.
    10. 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.
    11. Dranove, David & Sfekas, Andrew, 2008. "Start spreading the news: A structural estimate of the effects of New York hospital report cards," Journal of Health Economics, Elsevier, vol. 27(5), pages 1201-1207, September.
    12. Glazer, Jacob & McGuire, Thomas G., 2006. "Optimal quality reporting in markets for health plans," Journal of Health Economics, Elsevier, vol. 25(2), pages 295-310, March.
    13. Arne Risa Hole, 2007. "Modelling Heterogeneity in Patients' Preferences for the Attributes of a General Practitioner Appointment," Working Papers 022cherp, Centre for Health Economics, University of York.
    14. M. Kate Bundorf & Natalie Chun & Gopi Shah Goda & Daniel P. Kessler, 2008. "Do Markets Respond to Quality Information? The Case of Fertility Clinics," NBER Working Papers 13888, National Bureau of Economic Research, Inc.
    15. Town, Robert & Vistnes, Gregory, 2001. "Hospital competition in HMO networks," Journal of Health Economics, Elsevier, vol. 20(5), pages 733-753, September.
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    Cited by:
    1. Hugh Gravelle & Rita Santos & Luigi Siciliani & Rosalind Goudie, 2012. "Hospital Quality Competition Under Fixed Prices," Working Papers 080cherp, Centre for Health Economics, University of York.
    2. Filistrucchi, L. & Ozbugday, F.C., 2012. "Mandatory Quality Disclosure and Quality Supply: Evidence from German Hospitals," Discussion Paper 2012-070, Tilburg University, Center for Economic Research.
    3. Corinna Hentschker & Roman Mennicken, 2012. "The Relationship between Quality and Hospital Case Volume – An Empirical Examination with German Data," Ruhr Economic Papers 0341, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    4. Guccio, Calogero & Lisi, Domenico & Pignataro, Giacomo, 2014. "Readmission and Hospital Quality under Prospective Payment System," MPRA Paper 56490, University Library of Munich, Germany.
    5. Martin Gaynor & Carol Propper & Stephan Seiler, 2012. "Free to Choose? Reform and Demand Response in the English National Health Service," The Centre for Market and Public Organisation 12/297, Department of Economics, University of Bristol, UK.
    6. Stephen Gibbons & Eric Neumayer & Richard Perkins, 2013. "Student Satisfaction, League Tables and University Applications," SERC Discussion Papers 0142, Spatial Economics Research Centre, LSE.

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