Does Better Information About Hospital Quality Affect Patients' Choice? Empirical Findings from Germany
36 Pages Posted: 8 Apr 2008
Date Written: August 8, 2008
Background: Economic theory strongly suggests that better information about the quality of care affects patients' choice of health service providers. However, we have little empirical evidence about the impact of information provided on provider's choice. There is, for example, no systematic analysis available about the influence of quality information on the choice of hospitals in Germany.
Problem: In Germany, we recently find publicly available information about hospital quality. For example, 50 percent of the hospitals in the Rhine-Ruhr area do now publish their quality data voluntarily in a comprehensive, understandable and well prepared publication. In this publication they present quality data using indicators for structure, process and outcome quality. Empirically, we see a strong demand for this publication - either as a printed version or as a data base provided on the internet. However, we do not have information so far, if - and how - this information affect patients' choice of hospitals. This study, for the first time, provides empirical evidence.
Data and methodology: We take cross sectional time series using data from more than 700,000 patients in the Rhine-Ruhr area and in the Cologne-Bonn area (control group) for the time period 2003 to 2006, i.e. 16 quarters. In a first step we examine whether the publication of quality information affects hospital choice, using market shares and number of cases of the hospitals. To get information about the spatial effect of the quality information, we examine whether the quality information provided has an influence on the average travelling distance that patients accept to get to the hospital of their choice. For example we test whether high quality hospitals attract more patients with a higher travelling distance. In our analysis, we also consider a number of control variables on both patient and hospital level. In order to account for hospital-specific heterogeneity, which is caused by unobservable variables, we use fixed and random effects models.
Results: We find three important results. First: Hospitals, which publish their quality data voluntarily, do attract more patients - compared to such hospital, that do not publish their quality data. Second: In the group of the publishing hospitals, hospitals with quality below average are facing a significantly lower demand than hospitals with above average quality. In fact, hospitals with a higher than average quality slightly increased their market shares, whereas hospitals with a lower than average quality lost market shares. Third: Hospitals with quality below average are basically chosen by patients living nearby and not by those with a higher travelling distance.
Conclusion: The provision of quality data has a significant impact on hospital choice: a higher quality leads to a higher demand. Based on these finding decision makers in hospitals have strong incentives (i) to make quality information publicly available and (ii) to keep their quality of care high. In addition, patients have strong incentives to ask for more and better information - and than to make use of this information.
Keywords: Quality of care, Information, Hospital Choice
JEL Classification: I 12, C 33
Suggested Citation: Suggested Citation