Ruhr Economic Papers

Ruhr Economic Papers #516

Does Hospital Reputation Influence the Choice of Hospital?

by Adam Pilny and Roman Mennicken

RGS, RUB, RWI, 11/2014, 50 S./p., 8 Euro, ISBN 978-3-86788-591-1 DOI: 10.4419/86788591

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Abstract

A number of recent empirical studies document significant effects of in-patient care quality indicators on the choice of hospital. These studies use either objective quality indicators based on quantitative figures, or if subjective reputation scores are used, scores based on the opinion of hospital market insiders. We contribute to the current debate by using a subjective reputation score resorting to patient perceptions and examine its impact on the choice of hospital of patients undergoing a coronary artery bypass graft (CABG) in Germany. Our results show that 76% of the patients value hospital reputation positively when choosing a hospital. Moreover, we find evidence for a trade-off between hospital reputation and travel time, i.e. a significant share of patients is willing to accept additional travel time to get a treatment in a hospital with better reputation. The average marginal effect for hospital reputation confirms this finding, since the magnitude of the effect strengthens for higher thresholds of travel time. The results are robust for different degrees of co-morbidities and admission status.

JEL-Classification: C25, D12, I11

Keywords: Hospital choice; hospital reputation; mixed logit model

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