Federal Trade Commission

Can Ranking Hospitals on the Basis of Patients' Travel Distances Improve Quality of Care? Federal Trade Commission

Conventional outcomes report cards-- public disclosure of information about the patient-background-adjusted health outcomes of individual hospitals and physicians ? may help improve quality, but they may also encourage providers to ?game? the system by avoiding sick and/or seeking healthy patients. This book, proposes an alternative approach: ranking hospitals on the basis of travel distances of their Medicare patients. At least in theory, a distance report card could dominate conventional outcomes report cards: a distance report card might measure quality of care at least as well but suffer less from selection problems. The book uses data on elderly Medicare beneficiaries with heart attack and stroke from 1994 to 1999 to show that a distance report card world be both valid ? that is, correlated with true quality ? and able to distinguish confidently among hospitals- that is, able to reject at conventional significance levels the hypothesis that the true quality of a low ranked hospital was the same as the quality of the average hospital. The hypothetical distance report card the book proposes compares favorably to (although does not necessarily dominate) the California AMI outcomes report card.