A number of studies have already examined this question.
- Baker et al. (2003) examined the effectiveness of a public reporting effort in hospitals in Ohio, finding little relationship between a hospital’s report card ranking and changes in its market share.
- Cutler et al. (2004) examined the effects of reporting quality information about cardiac surgery on hospital volume, finding that being identified as a high-mortality hospital was associated with a decline in the number of cardiac surgery patients at that hospital in the period following the designation.
- Dafny and Dranove (2008) examine the influence of Medicare HMO report cards…showing that highly ranked plans were gaining market share prior to the report cards’ release but that the report cards led to further gains in market share for high-scoring plans.
- Chernew et al. (2008) use a Bayesian learning model to estimate enrollees’ general assessment of plan quality prior to the release of report cards and the changes in these assessments over time. They find that the addition of publicly reported plan information has a small incremental effect.
A more recent study by Werner et al. (2012) examines whether Medicare’s Nursing Home Compare website affects consumer decisions. Nursing Home Compare evaluates nursing homes using a variety of factors including: 1) whether they passed inspections, 2) structural measures such as staffing ratios, 3) quality measures reported on MDS assessments.
The authors find “a very small (though statistically significant) demand response to public reporting.” Skilled nursing facility (SNF) market share experienced a 0.1% increase in market share in cases where the facility increased its reported quality of treating patient pain from the 25th percentile SNF to the 75th percentile SNF.
Werner et al. note that this small economic response implies that SNFs are unlikely to invest in quality improvement since improving quality will not increase market share and improve profits.
One shortcoming of the study is that it only focuses on SNFs. Since Medicare uses SNFs for shorter term post-acute care, the study cannot identify changing consumer responses for long-term nursing stays. Because the time the patient spends in long-term nursing homes is typically much longer than SNFs and because patients typically have more time to review their long-term nursing home options than would be the case when they enter SNFs, it is more likely that a consumer response would be observed in the long-term nursing home setting.
- Rachel M. Werner, Edward C. Norton,,R. Tamara Konetzka, Daniel Polsky. Do consumers respond to publicly reported quality information? Evidence from nursing homes. J Health Econ Volume 31, Issue 1, January 2012, Pages 50–61.
- D.W. Baker, D. Einstadter, C. Thomas, S. Husak, N.H. Gordon, R.D. Cebul. The effect of publicly reporting hospital performance on market share and risk-adjusted mortality at high-mortality hospitals. Medical Care, 41 (2003), pp. 729–740.
- D.M. Cutler, R.S. Huckman, M.B. Landrum. The role of information in medical markets: an analysis of publicly reported outcomes in cardiac surgery. American Economic Review, 94 (2004), pp. 342–346.
- L. Dafny, D. Dranove. Do report cards tell consumers anything they don’t already know? The case of Medicare HMOs. The Rand Journal of Economics, 39 (2008), pp. 790–821
- M. Chernew, G. Gowrisankaran, D.P. Scanlon. Learning and the value of information: evidence from health plan report cards. Journal of Econometrics, 144 (2008), pp. 156–174.