Description:

Nicole Ozminkowski (Northwestern University): "Patient Demand and Quality Disclosure"

Abstract: Quality disclosure in the healthcare industry helps guide patients to choose better quality physicians, but since quality is difficult to measure and quality signals sometimes do not impact demand, it is an empirical question whether they can improve patient outcomes. In this paper, I explore whether a quality disclosure policy used by a private insurance company led to differences in the number of new patients seen by doctors based on their quality status, and whether patients who saw high quality doctors have better outcomes. I use a regression discontinuity design, which exploits the fact that the program discloses "high" and "low" quality without disclosing the underlying quality and cost "scores" that lead to these designations. I find that patients have a clear preference for "premium" doctors, who are designated as high quality and low cost by the insurer. Using a "mover" design, which exploits patient switches from low to high quality doctors, I find that seeing a higher quality doctor leads to a 72% increase in medical spending.