Determinants of hospital choice

Health insurers cannot expect a large impact from value based contracting on the number of patients. Proximity is the most important determinant of hospital choice and more than half of all patients visit the nearest hospital. Patients are willing to travel at most a few minutes extra for an increase in quality of one standard deviation. This is roughly equal to the difference between a hospital with an average score and a hospital that scores higher than 85 percent of all other hospitals. The number of patient then increases by at most ten to twenty percent.

Initiatives to provide quality information in a more accessible way can potentially increase the role of quality indicators. Furthermore, the government may increase possibilities for health insures to steer on quality, by lowering the remuneration of care from providers with whom they do not have a contract. This enables them to prevent patients from visiting hospitals where the quality is low – even when patients themselves would hardly have taken this into account.

These are the main results from research into the determinants of hospital choice that was performed by SEO Amsterdam Economics, Atlas Research and VU University, and commissioned by the innovation fund of health insurers (Innovatiefonds Zorgverzekeraars). The project focused on actual hospital choice, as opposed to hypothetical choices in stated preference research. It is based on an extensive dataset on health expenses at the patient level, combined with information about health providers and socioeconomic and demographic characteristics of patients.