Quality Information and Fragmented Markets

Several variables, including the type of procedure a patient requires, are associated with patients traveling greater distances to gain access to high-volume hospitals.

When a health care provider performs a given procedure more frequently, patients experience better outcomes; this is true for a range of specialized services including cardiovascular procedures, cancer treatment and orthopedic procedures.

This paper explores the behavior of patients and physicians with regard to volume-sensitive services, or services that result in better outcomes when a provider performs the services more often. The authors hypothesized that better knowledge of the benefits of high-volume institutions would overcome the forces of competition; patients, the authors believed, would travel distances for treatment at high-volume hospitals.

This study examined hospitalization data in four states over two time periods; 1995-1996 and 2001-2002. The states—Arizona, Florida, New Jersey and Wisconsin—reflected different geographic regions and diverse populations. The authors considered data for 13 volume-sensitive services.

Key Findings:

  • Statistical analyses indicated that increased knowledge led patients to travel greater distances to high-volume hospitals.
  • If a patient lived in an area with a greater number of providers (i.e., a more competitive market), the patient was less likely to drive even 7-10 miles to a high-volume hospital.

Liberals and conservatives support using public policy to increase the volume of procedures that health care providers perform. However, with increasing deregulation and privatization in the health care industry, there are more providers in the marketplace; more competition results in a lower volume of procedures at each institution. This study examined consumer and physician behavior in the context of a fragmented marketplace.