Can Public Reporting Cure Healthcare? The Role of Quality Transparency in Improving Patient-Provider Alignment

Operations Research, Forthcoming

HKS Working Paper No. RWP17-044

34 Pages Posted: 8 Nov 2017 Last revised: 30 May 2019

See all articles by Soroush Saghafian

Soroush Saghafian

Harvard University - Harvard Kennedy School (HKS)

Wallace J. Hopp

University of Michigan, Stephen M. Ross School of Business

Date Written: February 16, 2019

Abstract

Public reporting of medical treatment outcomes is being widely adopted by policymakers in an effort to increase quality transparency and improve alignment between patient choices and provider capabilities. We examine the soundness of this approach by studying the effects of quality transparency on patient choices, hospital investments, societal outcomes (e.g., patients' social welfare and inequality), and the healthcare market structure (e.g., medical or geographical specialization). Our results offer insights into why previous public reporting efforts have been less than fully successful and suggest ways in which future efforts can be more effective. Specifically, our analytical and simulation results calibrated with empirical data reveal that increasing quality transparency promotes increased medical specialization, results in decreased geographical specialization, and induces hospitals to invest in their strengths rather than their weakness. Furthermore, increasing quality transparency in the short-term typically improves social welfare and reduces inequality among patients. In the long-term, however, we find that increasing transparency can decrease social welfare, and fail to yield socially optimal outcomes even under full transparency. Hence, a policymaker concerned with societal outcomes should accompany increasing quality transparency with other policies that correct the allocation of patients to hospitals. Among these, we find that policies that incentivize hospitals are generally more effective than policies that incentivize patients. Finally, our results indicate that, to achieve maximal benefits from increasing quality transparency, policymakers should target younger, more affluent, or urban (i.e., high hospital density area) patients, or those requiring non-emergency treatment.

Keywords: Public Reporting, Outcome Transparency, Patient Choice, Hospital Investments

Suggested Citation

Saghafian, Soroush and Hopp, Wallace J., Can Public Reporting Cure Healthcare? The Role of Quality Transparency in Improving Patient-Provider Alignment (February 16, 2019). Operations Research, Forthcoming; HKS Working Paper No. RWP17-044 . Available at SSRN: https://ssrn.com/abstract=3066318 or http://dx.doi.org/10.2139/ssrn.3066318

Soroush Saghafian (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Wallace J. Hopp

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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