Patients as Consumers in the Market for Medicine: Bedside Manner > Survival Probability

Young and Chen, 2020: Consumer-driven health care is often heralded as a new quality paradigm in medicine. However, patients-as-consumers face difficulties in judging the quality of their medical treatment. With a sample of 3,000 U.S. hospitals, we find that neither medical quality nor patient survival rates have much impact on patient satisfaction with their hospital. In contrast, patients are very sensitive to the “room and board” aspects of care that are highly visible. Quiet rooms have a larger impact on patient satisfaction than medical quality, and communication with nurses affects satisfaction far more than the hospital-level risk of dying. Hospitality experiences create a halo effect of patient goodwill, while medical excellence and patient safety do not. Moreover, when hospitals face greater competition from other hospitals, patient satisfaction is higher but medical quality is lower. Consumer-driven health care creates pressures for hospitals to be more like hotels. These findings lend broader insight into unintended consequences of marketization.

It doesn’t surprise me that consumers respond much more to nice nurses than to survival probabilities. Nice nurses are observable by patients but survival probabilities can only be estimated from sophisticated statistical models. I do wish that patients paid more attention to the outputs of sophisticated statistical models when choosing doctors and hospitals, as I think this would improve quality, but mostly they don’t. As a result, competition increases patient satisfaction but less clearly increases medical quality and medical excellence. The authors, in fact, argue that competition reduces medical quality but that part of their paper is weaker than the former and the bulk of the economic literature indicates that hospital competition also increases quality albeit not strongly and with some mixed results.

Hat tip: Kevin Lewis.