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Mandatory Quality Disclosure and Quality Supply: Evidence from German Hospitals

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Author Info

  • Lapo Filistrucchi

    () (Università degli Studi di Firenze,)

  • Fatih Cemil Ozbugday

Abstract

Using a newly constructed dataset on German hospitals, which includes 24 process and outcome indicators of clinical quality, we test whether quality has increased in various clinical areas since the introduction of mandatory quality reports and the online publication of part of the collected quality measures. Our results suggest that process indicators of clinical quality have increased significantly in 2008 compared to 2006. In addition, the hospitals underperforming in 2006 appear to have increased their clinical quality relatively more than the other hospitals. When instead quality is measured by outcome indicators, average clinical quality is estimated to have increased for underperforming hospitals and decreased for the best performing hospitals in 2006, so that on average across all hospitals the changes in outcome indicators are insignificant for just more than half of the outcome quality measures. We further show that the best performing hospitals in 2006 in terms of outcome quality measures experienced an increase in their share of patients in 2008, thus providing indirect evidence that patients react to disclosed quality. Interestingly, the best performing hospitals in 2006 in terms of process quality measures did not experience a significant change in their share of patients in 2008, thus suggesting that patients react more to output than to process measures of quality. Finally, for the subset of hospitals who offer services in obstetrics, we find that higher competitive pressure, measured as the number of competitors in a given radius, is associated with a higher increase in quality following quality disclosure. We argue that the latter effect is unlikely to be due to selection of patients by hospitals.

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Bibliographic Info

Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze dell'Economia e Dell'Impresa in its series Working Papers Series with number wp2012_16.rdf.

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Length: 88 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:frz:wpaper:wp2012_16.rdf

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Keywords: health care; hospitals; quality disclosure; quality competition; Germany;

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References

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  1. 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.
  2. David Dranove & Mark A. Satterthwaite, 1992. "Monopolistic Competition When Price and Quality are Imperfectly Observable," RAND Journal of Economics, The RAND Corporation, vol. 23(4), pages 518-534, Winter.
  3. Annika Herr, 2008. "Cost and technical efficiency of German hospitals: does ownership matter?," Health Economics, John Wiley & Sons, Ltd., vol. 17(9), pages 1057-1071.
  4. David Dranove & Ginger Zhe Jin, 2010. "Quality Disclosure and Certification: Theory and Practice," NBER Working Papers 15644, National Bureau of Economic Research, Inc.
  5. David Dranove & Mark Shanley & Carol Simon, 1992. "Is Hospital Competition Wasteful?," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 247-262, Summer.
  6. 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.
  7. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
  8. Martin Gaynor, 2006. "What Do We Know About Competition and Quality in Health Care Markets?," NBER Working Papers 12301, National Bureau of Economic Research, Inc.
  9. David M. Cutler, 2002. "Health Care and the Public Sector," NBER Working Papers 8802, National Bureau of Economic Research, Inc.
  10. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr.
  11. Bijlsma, M. & Koning, P.W.C. & Shestalova, V., 2011. "The effect of competition on process and outcome quality within hospital care in The Netherlands," Discussion Paper 2011-002, Tilburg University, Tilburg Law and Economic Center.
  12. 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.
  13. Robinson, James C. & Luft, Harold S., 1985. "The impact of hospital market structure on patient volume, average length of stay, and the cost of care," Journal of Health Economics, Elsevier, vol. 4(4), pages 333-356, December.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Disclosing hospital quality works
    by Economic Logician in Economic Logic on 2012-10-02 14:29:00
  2. 10 Mid-Week PM Reads
    by Barry Ritholtz in The Big Picture on 2012-10-03 20:30:11

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