Do Report Cards Predict Future Quality? The Case of Skilled Nursing Facilities

Publication date: Available online 24 May 2019Source: Journal of Health EconomicsAuthor(s): Momotazur RahmanAbstractReport cards on provider performance are intended to improve consumer decision-making and address information gaps in the market for quality. However, inadequate risk adjustment of report-card measures often biases comparisons across providers. We test whether going to a skilled nursing facility (SNF) with a higher star rating leads to better quality outcomes for a patient. We exploit variation over time in the distance from a patient’s residential ZIP code to SNFs with different ratings to estimate the causal effect of admission to a higher-rated SNF on health care outcomes, including mortality. We found that patients who go to higher-rated SNFs achieved better outcomes, supporting the validity of the SNF report card ratings.Although quality is an essential determinant of the demand for goods and services, consumers often have incomplete information about quality prior to purchase. As such, in many markets consumers rely on published firm ratings to help choose a particular provider of goods or services. The quality of health care services is especially difficult for consumers to evaluate. Therefore, it can be efficient for the government to overcome this market failure by collecting information about quality and reporting it publicly. In the case of health care, the government publishes report cards online for hospitals, dialysis facilities, nursing homes, a...
Source: Journal of Health Economics - Category: Health Management Source Type: research