Patients as Consumers in the Market for Medicine: The Halo Effect of Hospitality

Abstract Consumer-driven health care is often heralded as a new quality paradigm in medicine. However, patients-as-consumers face difficulties in judging the quality of their medical treatment. With a sample of 3,000 U.S. hospitals, we find that neither medical quality nor patient survival rates have much impact on patient satisfaction with their hospital. In contrast, patients are very sensitive to the “room and board” aspects of care that are highly visible. Quiet rooms have a larger impact on patient satisfaction than medical quality, and communication with nurses affects satisfaction far more than the hospital-level risk of dying. Hospitality experiences create a halo effect of patient goodwill, while medical excellence and patient safety do not. Moreover, when hospitals face greater competition from other hospitals, patient satisfaction is higher but medical quality is lower. Consumer-driven health care creates pressures for hospitals to be more like hotels. These findings lend broader insight into unintended consequences of marketization.