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Why are health care report cards so bad (good)?

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  • Chen, Yijuan

Abstract

Abstract This paper provides a signaling-game theoretical foundation for empirically testing the effects of quality report cards in the U.S. health care industry. It shows that, when health care providers face an identical distribution of patient illness severities, the multidimensional measures in the existing report cards render them a mechanism that reveals the providers' qualities without causing them to select patients. However, non-identical patient type distributions between providers, attributed to the referring physician, may force the high-quality provider to shun patients in order to signal himself. Despite this imperfection, the existing report cards cause the minimum provider selection compared with alternative report mechanisms. Since the report cards not only may cause providers to select patients, but also cause patients to select providers, the single difference-in-differences estimates used in previous studies are not sufficient to indicate providers' selection behavior. In an updated empirical framework, a treatment effect shall be estimated once every period.

Suggested Citation

  • Chen, Yijuan, 2011. "Why are health care report cards so bad (good)?," Journal of Health Economics, Elsevier, vol. 30(3), pages 575-590, May.
  • Handle: RePEc:eee:jhecon:v:30:y:2011:i:3:p:575-590
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    References listed on IDEAS

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    1. 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.
    2. Mingshan Lu & Ching-to Albert Ma & Lasheng Yuan, 2003. "Risk selection and matching in performance-based contracting," Health Economics, John Wiley & Sons, Ltd., vol. 12(5), pages 339-354.
    3. Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
    4. Kyna Fong, 2007. "Evaluating Skilled Experts: Optimal Scoring Rules for Surgeons," Discussion Papers 07-043, Stanford Institute for Economic Policy Research.
    5. Gravelle, Hugh & Sivey, Peter, 2010. "Imperfect information in a quality-competitive hospital market," Journal of Health Economics, Elsevier, vol. 29(4), pages 524-535, July.
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    Cited by:

    1. Bruce Hollingsworth & Anthony Scott & Yijuan Chen & Juergen Meinecke, 2012. "Do Healthcare Report Cards Cause Providers To Select Patients And Raise Quality Of Care?," Health Economics, John Wiley & Sons, Ltd., vol. 21, pages 33-55, June.
    2. Katz, Michael L., 2013. "Provider competition and healthcare quality: More bang for the buck?," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 612-625.
    3. Chou, Shin-Yi & Deily, Mary E. & Li, Suhui & Lu, Yi, 2014. "Competition and the impact of online hospital report cards," Journal of Health Economics, Elsevier, vol. 34(C), pages 42-58.
    4. Yijuan Chen & Juergen Meinecke & Peter Sivey, 2013. "Can hospital waiting times be reduced by being published?," ANU Working Papers in Economics and Econometrics 2013-614, Australian National University, College of Business and Economics, School of Economics.
    5. repec:eee:jhecon:v:55:y:2017:i:c:p:1-13 is not listed on IDEAS

    More about this item

    Keywords

    Report cards Signaling game Difference-in-differences Experts;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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