Do Markets Respond to Quality Information? The Case of Fertility Clinics

1. Do Markets Respond to Quality Information? The Case of Fertility Clinics Presented by Kate Bundorf Co-authors: Natalie Chun, Gopi Shah Goda, Daniel Kessler AcademyHealth Annual Research Meeting June 10, 2008

2. Background • Quality report cards, which provide comparative information on provider performance, now exist in many different health care markets. • The main objective of quality report cards is to improve quality of care. • Consumer response to quality information is the key mechanism by which report cards could influence quality of care.

3. Evidence on Consumer Response to Quality Information is Mixed • Some studies find that report cards influence the market shares of hospitals and health plans. • (Mukamel and Mushlin 1998; Beaulieu 2002; Scanlon, Chernew et al. 2002; Wedig and Tai-Seale 2002; Cutler, Huckman et al. 2004; Dafny and Dranove 2005; Jin and Sorensen 2005; Chernew, Gowrisankaran et al. 2007). • Others find that report cards have little effect on markets for health services. • (Mennemeyer, Morrisey, and Howard 1997; Schneider and Epstein 1998; Mukamel, Mushlin et. al 2000; Romano and Zhou 2004; Howard and Kaplan 2006).

4. Research Question • Do consumers respond to information about clinic performance when choosing among clinics providing assisted reproductive therapies (ART)?

5. Assisted Reproductive Therapies (ART) • ART is a treatment for infertility in which a woman’s eggs are surgically removed from her ovaries and combined with sperm in a laboratory. A developing embryo is then returned to her uterus. • The first ART cycle was performed in the U.S. in 1981. • In 2004, 411 fertility clinics performed 127,977 cycles resulting in 36,760 live births of 49,458 infants.

6. Quality Reporting and Fertility Clinics • The Society of Assisted Reproductive Technology (SART) began collecting and reporting data on the utilization and outcomes for ART procedures in 1989. • The Fertility Clinic Success Rate and Certification Act of 1992 made the collection and dissemination of this information mandatory. • First mandatory report was made available in December of 1997 and was based on data from cycles started in 1995.

7. Empirical Strategy • Our estimate of the effect of public reporting is the difference between the relationship between clinic market share and measured performance before and after the information was disseminated to consumers. • Observe measures of both outcomes and patient mix for both the pre- and reporting periods. • Data include both measures that were and were not ultimately reported.

8. Data and Study Sample • Clinic-level information on utilization and outcomes from SART • Obtained hard copy reports from SART for 1989 to 1994 • Reports from 1995 to 2003 are available on the CDC website • Linked clinics over time based on name and address • Calculated 3-year lagged performance for clinics operating from 1996 to 2003 • Define the market as the MSA • Restrict our analysis to MSAs with 2 or more clinics

9. Performance Measures • Calculate clinic outcomes relative to competitors using the within-MSA Z-score. • Analyze the following Z variables: • 3-year lagged unadjusted birth rate • 3-year lagged patient age distribution (proportion under 40 years of age) • 1-year lagged unadjusted birth rate • 1-year lagged patient age distribution

10. Empirical Model • Dependent variable is ln of clinic market share in MSA • Z is clinic-level performance measure • P is an indicator of the public reporting period (1998+) • X are controls for time-varying MSA characteristics (number of incumbents, number of entrants, number of physicians, and county population) • Y includes year fixed effects • Estimation by OLS • Allow for correlation within MSA when estimating standard errors

11. Key Results

12. Summary of Findings • The implementation of mandatory quality reporting caused fertility clinics reporting better outcomes to gain market share relative to their competitors. • A change from the 25th to the 75th percentile z-score leads to a 12% increase in market share. • Consumers used basic information about patient mix when evaluating clinic performance. • Holding birth rate constant, clinics with a greater proportion of younger patients had lower market share after than before the implementation of public reporting. • Consumers have information about clinic quality from sources other than the report card. • 1 year lagged birth rates were positively correlated with market share and the effect did not differ after the implementation of public reporting

13. Why Do Report Cards have a Larger Effect in this Context than in Others? • Performance measures may be either more informative or easier to understand. • Consumers may have less access to or place less value on sources of information other than the report card. • The audience is different. • Patients seeking treatment for infertility are relatively young, wealthy, and highly educated; the setting is non-emergent.

14. Conclusions • Consumer report cards have potential to improve quality of care. • Consumers do respond to information on quality when choosing among providers. • Very simple risk adjustment can mute the incentives of providers to improve their scores by selecting good prognosis patients. • The overall effects on patient welfare in this context are unknown. • Did quality improve in response to quality reporting? • Were clinics able to improve their scores, without a corresponding reduction in market share, by selecting good prognosis patients based on characteristics that were not publicly reported? • The extent to which these findings are generalizable to other settings is uncertain.