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Do consumers respond to publicly reported quality information? Evidence from nursing homes

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  • Werner, Rachel M.
  • Norton, Edward C.
  • Konetzka, R. Tamara
  • Polsky, Daniel

Abstract

Public reporting of quality information is designed to address information asymmetry in health care markets. Without public reporting, consumers may have little information to help them differentiate quality among providers, giving providers little incentive to compete on quality. Public reporting enables consumers to choose highly ranked providers. Using a four-year (2000–2003) panel dataset, we examine the relationship between report card scores and patient choice of nursing home after the Centers for Medicare and Medicaid Services began publicly reporting nursing home quality information on post-acute care in 2002. We find that the relationship between reported quality and nursing home choice is positive and statistically significant suggesting that patients were more likely to choose facilities with higher reported post-acute care quality after public reporting was initiated. However, the magnitude of the effect was small. We conclude that there has been minimal consumer response to information in the post-acute care market.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jhecon:v:31:y:2012:i:1:p:50-61
    DOI: 10.1016/j.jhealeco.2012.01.001
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    References listed on IDEAS

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    1. Van Houtven, Courtney Harold & Norton, Edward C., 2008. "Informal care and Medicare expenditures: Testing for heterogeneous treatment effects," Journal of Health Economics, Elsevier, vol. 27(1), pages 134-156, January.
    2. 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.
    3. Bundorf, M. Kate & Chun, Natalie & Goda, Gopi Shah & Kessler, Daniel P., 2009. "Do markets respond to quality information? The case of fertility clinics," Journal of Health Economics, Elsevier, vol. 28(3), pages 718-727, May.
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    Citations

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    Cited by:

    1. Schmitz, Hendrik & Stroka, Magdalena A., 2014. "Do Elderly Choose Nursing Homes by Quality, Price or Location?," Ruhr Economic Papers 495, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Herr, Annika & Nguyen, Thu-Van & Schmitz, Hendrik, 2015. "Does quality disclosure improve quality? Responses to the introduction of nursing home report cards in Germany," DICE Discussion Papers 176, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Huang, Sean Shenghsiu & Hirth, Richard A., 2016. "Quality rating and private-prices: Evidence from the nursing home industry," Journal of Health Economics, Elsevier, vol. 50(C), pages 59-70.
    4. repec:zbw:rwirep:0495 is not listed on IDEAS
    5. Gibbons, Stephen & Neumayer, Eric & Perkins, Richard, 2015. "Student satisfaction, league tables and university applications: Evidence from Britain," Economics of Education Review, Elsevier, vol. 48(C), pages 148-164.
    6. Herr, A. & Saric, A., 2016. "The Welfare Effects of Single Rooms in German Nursing Homes: A Structural Approach," Health, Econometrics and Data Group (HEDG) Working Papers 16/23, HEDG, c/o Department of Economics, University of York.
    7. Gibbons, Stephen & Neumayer, Eric & Perkins, Richard, 2013. "Student satisfaction, league tables and University applications," LSE Research Online Documents on Economics 58540, London School of Economics and Political Science, LSE Library.
    8. Adam Pilny & Magdalena A. Stroka, 2016. "Determinants of received long-term care – Individual responses to regional nursing home provisions," Health Care Management Science, Springer, vol. 19(4), pages 326-337, December.
    9. Magdalena A. Stroka, 2016. "Drug overprescription in nursing homes: an empirical evaluation of administrative data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(3), pages 257-267, April.
    10. Zhao, Xin, 2016. "Competition, information, and quality: Evidence from nursing homes," Journal of Health Economics, Elsevier, vol. 49(C), pages 136-152.
    11. repec:eee:hapoch:v1_951 is not listed on IDEAS
    12. Ozbugday, F.C., 2012. "Empirical essays on ex post evaluations of competition and regulatory authorities decisions and policy reforms," Other publications TiSEM 3ef7e12f-223a-4622-9d0c-5, Tilburg University, School of Economics and Management.
    13. Siciliani Luigi, 2013. "The Economics of Long-Term Care," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 343-375, August.
    14. Herr, Annika & Nguyen, Thu-Van & Schmitz, Hendrik, 2016. "Public reporting and the quality of care of German nursing homes," Health Policy, Elsevier, vol. 120(10), pages 1162-1170.
    15. Hendrik Schmitz & Magdalena Stroka, 2014. "Do Elderly Choose Nursing Homes by Quality, Price or Location?," Ruhr Economic Papers 0495, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    16. Konetzka, R. Tamara & Polsky, Daniel & Werner, Rachel M., 2013. "Shipping out instead of shaping up: Rehospitalization from nursing homes as an unintended effect of public reporting," Journal of Health Economics, Elsevier, vol. 32(2), pages 341-352.

    More about this item

    Keywords

    Report cards; Quality information; Nursing home care; Nursing home demand;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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