Abstract
Background: 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.
Methods: 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.
Results: 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.
Conclusion: 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.