Quality Transparency and Healthcare Competition

John D. Kepler, Valeri V. Nikolaev and Nicholas Scott-Hearn
Additional contact information
John D. Kepler: Stanford U
Valeri V. Nikolaev: U of Chicago
Nicholas Scott-Hearn: U of Chicago

Research Papers from Stanford University, Graduate School of Business

Abstract: Transparency of quality in the healthcare sector primarily aims to facilitate patients’ care decisions, however, it also provides useful information to competing healthcare providers. We study how competitors respond to increased transparency about rivals’ quality by exploiting a regulatory change that initiated disclosure about the quality of all kidney dialysis facilities in the United States. We show that competitors are 27% more likely to open new facilities near low-quality incumbents after the transparency program is implemented. We also show that the effect of transparency on competition is concentrated in states without licensing requirements that create barriers to entry. Evidence from patient referrals indicates that the new transparency regime increases the sensitivity of demand to quality and that the increase in competition is costly to low-quality incumbents, as they lose 31% of their referrals—equivalent to a $3.74 million loss of a facility’s annual revenue—to higher-quality entrants. Finally, losing referrals leads incumbents to invest in better patient care through an immediate increase in the use of nurse practitioners and social workers.

JEL-codes: D83 G14 L14 M41 (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-com and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.gsb.stanford.edu/faculty-research/work ... althcare-competition

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:4007

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().