What is a star worth to Medicare beneficiaries? A discrete choice experiment of hospital quality ratings.

Abstract

Hospital quality ratings are widely available to help Medicare beneficiaries make an informed choice about where to receive care. However, how beneficiaries' trade-off between different quality domains (clinical outcomes, patient experience, safety, efficiency) and other considerations (out-of-pocket cost, travel distance) is not well understood. We sought to study how beneficiaries make trade-offs when choosing a hypothetical hospital. We administered an online survey that included a discrete choice experiment to a nationally representative sample of 1025 Medicare beneficiaries. On average, beneficiaries were willing to pay $1698 more for a hospital with a 1-star higher rating on clinical outcomes. This was over twice the value of the patient experience ($691) and safety ($615) domains and nearly 8 times the value of the efficiency domain ($218). We also found that the value of a 1-star improvement depends not only on the quality domain but also the baseline level of performance of the hospital. Generally, it is more valuable for low-performing hospitals to achieve average performance than for average hospitals to achieve excellence.