Publicly reported measures of hospital quality are intended to support consumer decision- making and to motivate hospitals to examine and improve their processes of care. In a well- functioning market, a hospital's ability to deliver goo health outcomes should lead to greater consumer demand and increased bargaining power for the hospital, and be rewarded by higher prices. Yet research has failed to find that quality information has impacted patients'choice of U.S. hospitals. Moreover, there is very little understanding of the factors that influence privately negotiated hospital prices. This project proposes examination of a yet unexplored channel though which public reporting of hospital quality information might be found to impact health care markets, and ultimately patients, namely private sector hospital pricing. We will examine the relationship between prices transacted between U.S. hospitals and private insurers and measures of hospital mortality and readmissions publicly reported by the Centers for Medicare and Medicaid Services (CMS) on the Hospital Compare website. We will address these aims:
Aim 1 : Measure and describe the distribution of hospital transaction prices using alternative measures of price dispersion, and alterative definitions of market areas.
Aim 2 : Estimate the impact of Hospital Compare quality rankings on prices of cardiac procedures, adjusted for hospital characteristics, insurer characteristics, market structures, case severity, and other patient characteristics.
Aim 3 : Determine the impact of implementation of Hospital Compare on price levels of cardiac procedures. Methods: We will use The MarketScan(R) Research Database for the years 2005-2012 to identify inpatient hospital admissions for cardiac procedures. These will be linked by hospital provider number to the CMS Hospital Compare data and to the American Hospital Association Annual Survey Database. Using linear regression models, we will estimate patient level price equations, in which the actual transacted price for the procedure serves as the dependent variable. We will examine the association of risk adjusted mortality rates and readmission rates of the hospital with prices, controlling for patient and procedure heterogeneity as well as measures of the relative bargaining power of hospitals and insurers. Quasi-experimental techniques will be used to evaluate the impact of Hospital Compare on hospital markets and prices.

Public Health Relevance

This project will examine the impact of the CMS Hospital Compare quality rankings on hospital prices for related cardiac procedures. The extent to which higher prices reflect higher performance as reported to consumers is not known. To address this we will estimate the effects of rankings on prices, controlling for both patient severity and marke structure, as well as examine whether the implementation of Hospital Compare affected price levels for privately insured patients.

National Institute of Health (NIH)
Agency for Healthcare Research and Quality (AHRQ)
Research Project (R01)
Project #
Application #
Study Section
Health Systems Research (HSR)
Program Officer
Sandmeyer, Brent
Project Start
Project End
Budget Start
Budget End
Support Year
Fiscal Year
Total Cost
Indirect Cost
George Washington University
Public Health & Prev Medicine
Schools of Public Health
United States
Zip Code
Dor, Avi; Encinosa, William E; Carey, Kathleen (2015) Medicare's Hospital Compare quality reports appear to have slowed price increases for two major procedures. Health Aff (Millwood) 34:71-7