Working Paper: NBER ID: w22858
Authors: Avi Dor; William Encinosa; Kathleen Carey
Abstract: Previous research found that the initiation of Hospital Compare (HC) quality reporting had little impact on patient outcomes. However little is known about its impact on hospital prices, which may be significant since insurers are positioned to respond to quality information when engaging hospitals in price negotiations. To explore this issue we estimate variants of difference-in-difference models allowing HC impacts to vary by levels of quality scores. We separately examine the effects of the three main scores (heart attack, heart failure, and combined mortalities) on transaction prices of two related cardiac procedures: bypass surgery and angioplasty. States which had mandated reporting systems preceding HC form the control group. Analyzing claims data of privately insured patients, we find that HC exerted downward pressure on prices, which we attribute to competitive pressures. However, hospitals ranked “above average” captured higher prices, thereby offsetting the overall policy effect. We conclude that HC was effective at constraining prices without penalizing high performers.
Keywords: hospital compare; quality ratings; cardiac pricing; difference-in-differences
JEL Codes: I11; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| hospital compare (HC) ratings (I11) | CABG prices (P22) |
| hospital compare (HC) ratings (I11) | PCI prices (E30) |
| hospital compare (HC) ratings (I11) | competitive pressures on hospitals (I11) |
| hospitals ranked above average in quality (I11) | higher prices for high-performing hospitals (I11) |
| hospital compare (HC) ratings (I11) | overall downward pressure on prices (E31) |