Start Spreading the News: A Structural Estimate of the Effects of New York Hospital Report Cards

Research on the effects of publicly reported hospital quality report cards on patient market shares is mixed. Higher ranking hospitals do not consistently experience increases in market share. We argue that this may be because the report cards do not always convey news about quality; in some cases the rankings conform with prior beliefs about quality. We develop a structural model of the news in report cards and estimate the model using data from New York State in 1989-1991. We show hospitals with positive news in the original 1990 report cards experienced a gain in market share, but that a misspecified model might continue to find no report card effect.