Can Public Reporting Cure Healthcare? The Role of Quality Transparency in Improving Patient–Provider Alignment

In the past two decades, government and private organizations have ramped up efforts to measure and publicly report clinical outcomes, a practice known as “public reporting.” For example, in 2005 the Center for Medicare and Medicaid Services launched the website Hospital Compare with share outcome data. Other sites, including CalHospitalCompare.org , the ProPublica Surgeon Scorecard, the Compare Hospitals site by the Leapfrog Group, and the hospital-rating websites of Healthgrades, Consumer Reports, Yelp, and U.S. News, have provided similar information. Despite making more and more information available, empirical evidence suggests that the reality of public reporting has fallen short of the promise. In “Can Public Reporting Cure Healthcare? The Role of Quality Transparency in Improving Patient-Provider Alignment” S. Saghafian and W. J. Hopp use a model of the impact of quality transparency via public reporting to generate insights into why previous efforts have been less than fully successful and to suggest ways in which future efforts can be more effective. Public reporting of medical treatment outcomes is being widely adopted by policymakers in an effort to increase quality transparency and improve alignment between patient choices and provider capabilities. We examine the soundness of this approach by studying the effects of quality transparency on patient choices, hospital investments, societal outcomes (e.g., patients’ social welfare and inequality), and the healthcare market structure (e.g., medical or geographical specialization). Our results offer insights into why previous public reporting efforts have been less than fully successful and suggest ways in which future efforts can be more effective. Specifically, our analytical and simulation results calibrated with empirical data from the Centers for Medicare and Medicaid Services reveal that increasing quality transparency promotes increased medical specialization, results in decreased geographical specialization, and induces hospitals to invest in their strengths rather than their weakness. Furthermore, increasing quality transparency in the short-term typically improves social welfare and reduces inequality among patients. In the long-term, however, we find that increasing transparency can decrease social welfare, and fail to yield socially optimal outcomes, even under full transparency. Hence, a policymaker concerned with societal outcomes should accompany increasing quality transparency with