A Theory of Waiting Time Reporting and Quality Signaling

Yijuan Chen, Juergen Meinecke () and Peter Sivey

Health Economics, 2016, vol. 25, issue 11, 1355-1371

Abstract: We develop a theoretical model to study a policy that publicly reports hospital waiting times. We characterize two effects of such a policy: the ‘competition effect’ that drives hospitals to compete for patients by increasing service rates and reducing waiting times and the ‘signaling effect’ that allows patients to distinguish a high‐quality hospital from a low‐quality one. While for a low‐quality hospital both effects help reduce waiting time, for a high‐quality hospital, they act in opposite directions. We show that the competition effect will outweigh the signaling effect for the high‐quality hospital, and consequently, both hospitals' waiting times will be reduced by the introduction of the policy. This result holds in a policy environment where maximum waiting time targets are not binding. Copyright © 2015 John Wiley & Sons, Ltd.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:25:y:2016:i:11:p:1355-1371

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