Disclosing hospital quality works

Usually, better information leads to better outcomes (well except for those people who could exploit some information asymmetry). People can better evaluate their options, and they do not like uncertainty. The impact of information on behavior, however, is ambiguous. For example, I recently discussed the case of a supervision contract that needs artificial uncertainty to be constraint-efficient. Disclosing the quality of some goods provided by the state, such as schools, is contentious. In that case, it turns out to be beneficial.

The same seems to apply for hospitals. Lapo Filistrucchi and Fatih Cemil Ozbugday study data from German hospitals when mandatory quality reports were introduced. This new policy improved overall quality, and more so in hospitals that were initially graded inferior. Those that were initially better had more patients thereafter, thus the public looked at those grades. And where there was more hospital density, the authors can see more quality improvements, indicating that competition is at work in beneficial ways. An improvement in overall well-being is thus likely (we cannot be sure, as the use of resources to reach quality improvements is not measured).