Interpreting Market Share Changes as Evidence for Effectiveness of Quality Report Cards

Abstract

report cards have become an integral part of the American health care system. Quality From the early, now abandoned, efforts by the then Health Care Financing Administration (HCFA), which began publishing reports with risk-adjusted mortality rates for all hospitals in the country in the mid 1980s, we have moved into an era in which report cards abound. The federal government, through the Centers for Medicare & Medicaid Services (CMS), formerly HCFA, is now publishing Web-based report cards on hospitals, nursing homes, home care agencies, and managed care organizations (see http://www.medicare.gov). Many state governments, health plans, employers, and employer coalitions publish report cards as well. These reports typically focus on the quality of the clinical services of medical providers, although some may include information about other aspects of care, such as office staff courtesy, helpfulness, and respect.1 Although the market seems to have forged enthusiastically ahead with report cards, the scientific evidence about their effectiveness, and in particular, their impact on patient referrals, is mixed. Four review articles have examined studies of various report cards and concluded that, for the most part, there is only minimal evidence that report cards influence referral choices made by patients and their physicians. Mukamel and Mushlin2 reviewed 8 studies, including the HCFA Hospital Mortality reports, the New York State (NYS) and the Pennsylvania Coronary Artery Bypass Graft (CABG) reports, and the Health Plan Employer Data Information Set (HEDIS) managed care report (studies that were published between 1988 and 2000) and concluded that there is only a minimal effect on choice of provider. Marshall et al3 reviewed 9 studies including the HCFA Hospital Mortality reports, the NYS and the Pennsylvania CABG reports, and physician fee data (studies published between 1988 and 1998). They also found that, if an effect on provider choice and market shares is detected, it tends to be small. Schauffler and Mordavsky4 reviewed 16 studies of report cards on hospitals, cardiac surgeons, and managed care organizations (published between 1996 and 2000) that examined choice of providers made by patients, managed care organization, and employers. They also found that the impact of report cards is small and concluded that they do not make a difference in decisionmaking. A more recent review by Werner and Asch5 reached similar conclusions. This body of evidence, which has led some scholars to conclude that report cards do not influence choice of providers, flies in the face of the market's belief in the importance of report cards, as evidenced by the proliferation of these reports in recent years. This apparent paradox warrants examination of the question of whether the conclusions drawn from the empirical evidence indeed imply that the reports have no impact and have failed to play an important role in the health care system. In the remainder of this essay we examine the rationale and theoretical expectations for report cards and then discuss several reasons for the empirical findings of minimal effect on referrals, including the credibility and usefulness of the information in different report cards, their news content, and the impact of providers' capacity limitations. We then argue that a