Hospitals As Hotels: The Role of Patient Amenities in Hospital Demand / Dana Goldman, John A. Romley.

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Goldman, Dana

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w14619.Publication details: Cambridge, Mass. National Bureau of Economic Research 2008.Description: 1 online resource: illustrations (black and white)Subject(s):

I11 - Analysis of Health Care Markets

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Abstract: Amenities such as good food, attentive staff, and pleasant surroundings may play an important role in hospital demand. We use a marketing survey to measure amenities at hospitals in greater Los Angeles and analyze the choice behavior of Medicare pneumonia patients in this market. We find that the mean valuation of amenities is positive and substantial. From the patient perspective, hospital quality therefore embodies amenities as well as clinical quality. We also find that a one-standard-deviation increase in amenities raises a hospital's demand by 38.4% on average, whereas demand is substantially less responsive to clinical quality as measured by pneumonia mortality. These findings imply that hospitals may have an incentive to compete in amenities, with potentially important implications for welfare.

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Previous	nber w14616 A General-Equilibrium Asset-Pricing Approach to the Measurement of Nominal and Real Bank Output /	nber w14617 Unemployment Dynamics in the OECD /	nber w14618 Ex Ante Efficiency in School Choice Mechanisms: An Experimental Investigation /	nber w14619 Hospitals As Hotels: The Role of Patient Amenities in Hospital Demand /	nber w1462 The Persistence of Volatility and Stock Market Fluctuations /	nber w14620 Information-Constrained State-Dependent Pricing /	nber w14621 Monetary Policy, Trend Inflation and the Great Moderation: An Alternative Interpretation /	Next

December 2008.

Amenities such as good food, attentive staff, and pleasant surroundings may play an important role in hospital demand. We use a marketing survey to measure amenities at hospitals in greater Los Angeles and analyze the choice behavior of Medicare pneumonia patients in this market. We find that the mean valuation of amenities is positive and substantial. From the patient perspective, hospital quality therefore embodies amenities as well as clinical quality. We also find that a one-standard-deviation increase in amenities raises a hospital's demand by 38.4% on average, whereas demand is substantially less responsive to clinical quality as measured by pneumonia mortality. These findings imply that hospitals may have an incentive to compete in amenities, with potentially important implications for welfare.