The Value of Relationships in Healthcare

Abstract

Many interactions between buyers and sellers occur in the context of relationships. In healthcare markets, patient-primary care physician (PCP) relationships may be some of the most important. I establish that patients value relationships: when a PCP moves 40 minutes away, 45% of patients follow. Patients with longer relationships are 37% more likely to travel with a moving PCP than patients with shorter relationships. Relationships also positively impact patients’ production of health. In response to an exogenous loss of a longstanding PCP, adverse events increase: patient mortality increases by 4%, emergency department visits increase by 4%, and hospital admissions increase by 3%. Adverse events monotonically increase with the length of the exiting PCP-patient relationship. These results suggest that contracts should be structured around relationships whenever possible.

Keywords: primary care, relationships, turnover, access, quality