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Why Are Health Care Report Cards So Bad (Good)?

  • Yijuan Chen

    ()

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, a trade-off between multidimensional measures in the existing report cards renders 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 su¢ cient to indicate providers' selection behavior, and cannot capture the report cards' long-run welfare effect with short-run data. In an updated empirical framework, a treatment effect will be estimated once every period.

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File URL: http://cbe.anu.edu.au/researchpapers/econ/wp511.pdf
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Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2009-511.

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Length: 40 Pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:acb:cbeeco:2009-511
Contact details of provider: Postal: Canberra, ACT 2601
Phone: +61 2 6125 3807
Fax: +61 2 6125 0744
Web page: http://rse.anu.edu.au/
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  1. Mingshan Lu & Ching-to Albert Ma & Lasheng Yuan, 2000. "Risk Selection and Matching in Performance-Based Contracting," Papers 0101, Boston University - Industry Studies Programme.
  2. 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.
  3. Kyna Fong, 2007. "Evaluating Skilled Experts: Optimal Scoring Rules for Surgeons," Discussion Papers 07-043, Stanford Institute for Economic Policy Research.
  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. 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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