Hospital Choice for Cataract Treatments: The Winner Takes Most

Transparency in quality of care is an increasingly important issue in healthcare. In many international healthcare systems, transparency in quality is crucial for health insurers when purchasing care on behalf of their consumers, for providers to improve the quality of care (if necessary), and for consumers to choose their provider in case treatment is needed. Conscious consumer choices incentivize healthcare providers to deliver better quality of care. This paper studies the impact of quality on patient volume and hospital choice, and more specifically whether high quality providers are able to attract more patients. The dataset covers the period 2006-2011 and includes all patients who underwent a cataract treatment in the Netherlands. We first estimate the impact of quality on volume using a simple ordinary least squares (OLS), second we use a mixed logit to determine how patients make trade-offs between quality, distance and waiting time in provider choice. At the aggregate-level we find that, a one-point quality increase, on a scale of one to a hundred, raises patient volume for the average hospital by 2-4 percent. This effect is mainly driven by the hospital with the highest quality score: the effect halves after excluding this hospital from the dataset. Also at the individual-level, all else being equal, patients have a stronger preference for the hospital with the highest quality score, and appear indifferent between the remaining hospitals. Our results suggest that the top performing hospital is able to attract significantly more patients than the remaining hospitals. We find some evidence that a small share of consumers may respond to quality differences, thereby contributing to incentives for providers to invest in quality and for insurers to take quality into account in the purchasing strategy.