Patient Selection in the Presence of Regulatory Binding Health Care Report Cards: The Case of Organ Transplantation

To date most health care report cards provide information to consumers but do not represent a constraint on the behavior of health care providers. This is not the case with the report cards utilized within kidney transplantation since the 2007 Medicare conditions of participation for transplant centers. This research investigated the impact of the binding report cards used in organ transplantation to determine whether or not the additional regulatory oversight incentivizes individuals to select transplant centers that meet regulatory standards. We exploited health care report cards and kidney transplant candidates’ information from a large national registry (2003-2010). We applied a difference-in-differences estimation strategy, which isolates the impact of a binding report card relative to a non-binding report. A sorting equilibrium model was also employed to account for center-level heterogeneity and the presence of congestion or agglomeration effects and the results are compared to a conditional logit specification. Results from the conditional logit model indicated that a poor and binding health care report card decreased the probability that a patient would select a transplant center. However, the impact of the binding report card was purged in the sorting equilibrium model. Accounting for endogenous patient sorting and center-level heterogeneity, we found little support for the regulation increasing the effects of quality report cards on patient behavior. We also found evidence of congestion effects when spatial choice sets were large. Patients were less likely to select a center when more options were available and the waiting list was relatively long at the center.