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 other policies that correct the allocation of patients to hospitals. Among these, we find that policies that incentivize hospitals are generally more effective than policies that incentivize patients. Finally, our results indicate that, to achieve maximal benefits from increasing quality transparency, policymakers should target younger, more affluent, or urban (i.e., high hospital density area) patients, or those requiring nonemergency treatment.
Dr. Soroush Saghafian is an Associate Professor at Harvard University. He is the founder and director of the Public Impact Analytics Science Lab (PIAS-Lab) at Harvard, which is devoted to advancing and applying the science of analytics for solving societal problems that can have public impact. He serves as a faculty affiliate for the Harvard Ph.D. Program in Health Policy, the Harvard Center for Health Decision Science, the Harvard Mossavar-Rahmani Center for Business and Government, the Harvard Data Science Initiative, and is an associate faculty member at the Harvard Ariadne Labs (Health Systems Innovation). He is interested in using and developing operations research and management science techniques that can have significant public benefits. He has been collaborating with a variety of hospitals in improving their operational efficiency, patient flow, medical decision-making, and more broadly, healthcare delivery policies. Dr. Saghafian’s research has appeared in the news and he has received various recognitions for his research, including the INFORMS MSOM Young Scholar Prize “for outstanding contributions to scholarship in operations management,” the Inaugural INFORMS Mehrotra Research Excellence Award “for significant contributions to the practice of health applications through operations research (OR) and management science (MS) modeling and methodologies,” INFORMS Pierskalla Award “for the best research paper in Healthcare,” INFORMS M&SOM Journal Best Paper Award, INFORMS MSOM Society Best Paper Award of Service Special Interest Group (SIG), INFORMS Public Sector Operations Research Best Paper Award (second place), POMS College of Healthcare Best Paper Award (first place), and INFORMS Junior Faculty Interest Group (JFIG) Paper Competition (honorable mention). Dr. Saghafian serves on the editorial board of a few journals including Operations Research, Production and Operations Management, INFORMS Service Science, and IISE Transactions. He also serves as an AE or referee for over 13 journals.