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A Theory of Waiting Time Reporting and Quality Signaling

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JournalHealth Economics (United Kingdom)
DateAccepted/In press - 3 Jul 2015
DateE-pub ahead of print (current) - 10 Aug 2015
Issue number11
Volume25
Number of pages17
Pages (from-to)1355-1371
Early online date10/08/15
Original languageEnglish

Abstract

We develop a theoretical model to study a policy that publicly reports hospital waiting times. We characterize two effects of such a policy: the ‘competition effect’ that drives hospitals to compete for patients by increasing service rates and reducing waiting times and the ‘signaling effect’ that allows patients to distinguish a high-quality hospital from a low-quality one. While for a low-quality hospital both effects help reduce waiting time, for a high-quality hospital, they act in opposite directions. We show that the competition effect will outweigh the signaling effect for the high-quality hospital, and consequently, both hospitals' waiting times will be reduced by the introduction of the policy. This result holds in a policy environment where maximum waiting time targets are not binding.

    Research areas

  • quality signaling, report cards, waiting times

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