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Abstract
Quality competition among hospitals, induced by patients freely choosing their hospital in a price regulated market, can only be realized if quality differences between hospitals are transparent, understandable, and thus influence patients’ hospital choice. We use data from ~145,000 German patients and ~ 900 hospitals for colorectal resections and knee replacements to investigate whether patients value quality and specialization when choosing their hospital. Using a random utility choice model, we estimate patients’ marginal utilities, willingness to travel and change in hospital demand for quality improvements. Patients respond to service quality and specialization and thus, quality competition seems to be present. Colorectal resection patients are willing to travel longer for more specialized hospitals (+9% for procedure volume, +9% for certification). Knee replacement patients travel longer for hospitals with better service quality (+6%) and higher procedure volume (+12%). However, clinical quality indicators, often difficult to access and interpret, barely play a role in patients’ hospital choice. Furthermore, we find that competition on quality for colorectal resection is rather local, whereas for knee replacement we observe regional competition patterns.
Highlights
In Germany, patients can freely choose the hospital they feel is most suitable for their treatment [1, 2]
Highlights & We merge data from several sources and include 66,645 colorectal resection patients treated in 862 hospitals and 82,015 knee replacement patients treated in 844 hospitals in Germany into our sample & Using a utility choice model, we found that patients are willing to travel between 1 and 12% longer for better quality and more specialized hospitals, in which specialization is more important for colorectal resection and service quality for knee replacement & by improving quality and specializing, hospitals can increase their demand by 2 to 28%
Our two samples consist of 66,645 patients treated in 862 different hospitals in 2017 and 2018 for colorectal resection, resulting in 1617 hospital observations, and 82,041 patients treated in 844 different hospitals resulting in 1591 hospital observations for knee replacement, respectively
Summary
In Germany, patients can freely choose the hospital they feel is most suitable for their treatment [1, 2]. One opportunity to gain a competitive edge is to influence patients’ hospital choice by offering better quality, leading to a competition for patients through quality [3]. Several studies show that free hospital choice and the consequent quality competition lead to better hospital outcomes [3,4,5]. Quality competition will only be fully effective and incentivized by hospital management if patients care about quality variation and use it in their decision-making process [6]. Several studies show that quality differences prevail across hospitals for several treatment areas and geographies [10,11,12,13]
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