Does Social Media Dominate Government Report Cards in Influencing Nursing Home Demand?

49 Pages Posted: 6 Mar 2020 Last revised: 26 Jun 2023

See all articles by Yuanchen Li

Yuanchen Li

Tongji University - Advanced Institute of Business

Lauren Xiaoyuan Lu

Dartmouth College - Tuck School of Business

Susan F. Lu

Purdue University - Krannert School of Management

Date Written: June 4, 2023

Abstract

Problem definition: Social media has become an indispensable platform for disseminating quality information to consumers across various service sectors. Recently, it has extended its influence to healthcare services, which traditionally relied on government report cards to disclose standardized quality information to the public. This article explores the impact of social media on consumer demand for healthcare services and compares its effectiveness with government report cards.

Methodology/Results: We analyze quality ratings of U.S. nursing homes collected from two information channels: 1) consumer ratings on Yelp and 2) government ratings on Nursing Home Compare, both of which adopt a five-star quality rating scale and are accessible on the Internet. We employ the method of difference-in-differences with continuous treatment intensity and instrumental variables to analyze the data. Using nursing home resident admissions as a proxy for consumer demand, we find that higher Yelp ratings led to higher consumer demand, particularly among Medicare-covered consumers. Furthermore, the effect of Yelp ratings was primarily driven by extreme ratings (1-star or 5-star), as opposed to neutral ratings. We also find that Yelp ratings exerted a stronger effect on consumer demand than government ratings. This dominance of Yelp ratings over government ratings was observed primarily in markets with high Yelp penetration or markets with low and medium consumer education levels. Although higher Yelp ratings were associated with increased net incomes, we find little evidence that nursing homes made quality improvement in response to their Yelp ratings.

Managerial implications: We recommend that the Centers for Medicare and Medicaid Services recognize social media platforms as valuable sources of information and collaborate with reputable platforms, such as Yelp, to promote public awareness of government report cards like Nursing Home Compare. Moreover, we advise nursing home operators to proactively manage their reputation on social media by promptly addressing consumer complaints and implementing quality improvement measures.

Note:
Funding: None.

Competing interests statement: None.

Keywords: online consumer reviews, government report cards, nursing homes, healthcare, quality of care

Suggested Citation

Li, Yuanchen and Lu, Lauren Xiaoyuan and Lu, Susan Feng, Does Social Media Dominate Government Report Cards in Influencing Nursing Home Demand? (June 4, 2023). Available at SSRN: https://ssrn.com/abstract=3531964 or http://dx.doi.org/10.2139/ssrn.3531964

Yuanchen Li (Contact Author)

Tongji University - Advanced Institute of Business ( email )

1239 Siping Road
Shanghai, 200092
China

Lauren Xiaoyuan Lu

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Susan Feng Lu

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

HOME PAGE: http://https://sites.google.com/site/susanluhome/home

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