NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Health Care Report Cards May Fail Patients

"For healthier patients... doctors and hospitals substituted coronary artery bypass surgery for other cardiac surgical treatments. This shift increased expenditures, but failed to produce any measurable health benefits. For sicker patients, doctors and hospitals avoided performing cardiac surgical treatments of all types. These changes were particularly harmful, leading sicker patients to have substantially higher frequencies of heart failure and repeated heart attacks, and ultimately higher costs of care."

Health care quality report cards - such as New York's list of physician and hospital coronary artery bypass graft (CABG) surgery mortality rates -- have been the focus of an extensive policy debate. Supporters of report cards argue that they enable patients to identify the best doctors and hospitals, while simultaneously giving providers of care incentives to improve quality. Skeptics counter that report cards may give providers incentives to decline to treat more difficult, severely ill patients, in order to improve their ranking. Whether these report cards are good for patients, and society, depends on whether their financial and health benefits outweigh their costs in terms of the quantity, quality, and appropriateness of the medical treatment they induce.

In Is More Information Better? The Effects of "Report Cards" on Health Care Providers (NBER Working Paper No. 8697), authors David Dranove, Daniel Kessler, Mark McClellan, and Mark Satterthwaite examine the consequences of the CABG report cards adopted by New York (NY) and Pennsylvania (PA) in the early 1990s. They find evidence that report cards had both beneficial and harmful effects. On one hand, report cards increased the proportion of sicker cardiac patients who were treated at teaching hospitals, which may be better equipped to handle such complex cases. On the other hand, report cards led providers of medical care to shift surgical treatment for cardiac illness toward healthier and away from sicker patients. On net, though, report cards led to higher levels of resource use and worse health outcomes, especially for sicker patients. Thus, the authors conclude that - at least in the short run - these report cards decreased patient and social welfare.

To assess competing claims about the efficacy of report cards, the authors estimate the effects of report cards on essentially all U.S. elderly heart attack (acute myocardial infarction, or AMI) patients and all elderly patients receiving CABG surgery from 1987 through 1994. They compare the trends in treatments, cost, and quality of care after the introduction of report cards in NY and PA to the trends in other states.

The authors document an important benefit from report cards: increased sorting of patients to providers on the basis of the severity of their illness. Hospitals in NY and PA experienced declines in within-hospital variation in their patients' health status, with those two states' teaching hospitals picking up an increasing share of patients with more severe illness. However, they also find an important cost: substantial selection by providers. Report cards led to a decline in the illness severity of patients receiving CABG in NY and PA relative to patients in states without report cards, as measured by hospital utilization in the year before surgery. In addition, report cards led to substantial declines in other intensive cardiac procedures for both relatively healthy and sick AMI patients.

For healthier patients, then, doctors and hospitals substituted CABG for other cardiac surgical treatments. This shift increased expenditures, but failed to produce any measurable health benefits. For sicker patients, doctors and hospitals avoided performing cardiac surgical treatments of all types. These changes were particularly harmful, leading sicker patients to have substantially higher frequencies of heart failure and repeated AMIs, and ultimately higher costs of care.

The design of report cards offers a distinctive challenge: how to take advantage of the benefits to patients of enhanced information, while avoiding the adverse incentives for doctors and hospitals that the publication of the information may create. Because report cards are not unique to health care -- school performance reports raise the same issues -- the authors conclude that the debate over report cards is likely to continue.


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