Project 6 (2017-2024) - Market Learning and Healthcare Disparities

Health care outcomes depend crucially on whether patients are able to access providers with high clinical quality. This project studies the role of market learning in health care – the process by which markets, driven by patients and their decision-making partners like ambulance drivers and referring physicians, allocate patients to providers. When market learning favors high-quality health care providers, patients experience better health outcomes, and, moreover, providers are incentivized to improve quality because their patient volumes depend on it. An implication is that socioeconomic disparities in market learning can lead to disparities in treatment quality and thus health outcomes.

The conventional wisdom is that patients and their surrogates are poorly informed about quality variations, limiting the scope for market learning. Our preliminary work suggests, however, that market learning operates: high-quality hospitals tend to be larger and are more likely to grow than their low-quality peers. This work expands on the preliminary exercises in several ways to paint a nuanced picture of where (and for whom) health care markets raise clinical quality.

This project takes two approaches to analyze health care markets: the first assesses hospitals' market share at a point in time and over time, and how that share correlates with a broad set of quality metrics; the second builds econometric models of the hospital choice of the patient to estimate how much value patients place on hospital quality. Quality includes clinical outcomes, clinical processes, and patient satisfaction. The project’s first Specific Aim investigates the role of patient attributes like socioeconomic group and insurance in enabling patients to reach high quality hospitals. It focuses in particular on vulnerable populations, like those with chronic illness or those from areas with poor population health. This Aim will show how health care markets function for socioeconomic groups and how markets affect health care disparities. The second Aim expands the scope of the market analysis to cancer patients. Health care markets can potentially function better for cancer than emergency conditions because cancer patients have more time to decide on a provider, widening their scope for choice. This Aim will provide the first estimates of how markets function for cancer and how they compare to markets for acute conditions. The project's third Aim considers technology as an additional factor that determines market allocation. It will estimate the extent to which markets favor technology above and beyond quality, how patients trade off between technology and quality, and how patients’ preferences for technology affect clinical outcomes. Finally, we synthesize the findings of these analyses together with those of other Projects within the program project to assess the role of markets in relation to other tools in driving the value and quality of care delivery to improve the health of an aging population.