What is a star worth to Medicare beneficiaries? A discrete choice experiment of hospital quality ratings.

Hospital quality ratings are widely available to help Medicare beneficiaries make an informed choice about where to receive care. However, how beneficiaries' trade-off between different quality domains (clinical outcomes, patient experience, safety, efficiency) and other considerations (out-of-pocket cost, travel distance) is not well understood. We sought to study how beneficiaries make trade-offs when choosing a hypothetical hospital. We administered an online survey that included a discrete choice experiment to a nationally representative sample of 1025 Medicare beneficiaries. On average, beneficiaries were willing to pay $1698 more for a hospital with a 1-star higher rating on clinical outcomes. This was over twice the value of the patient experience ($691) and safety ($615) domains and nearly 8 times the value of the efficiency domain ($218). We also found that the value of a 1-star improvement depends not only on the quality domain but also the baseline level of performance of the hospital. Generally, it is more valuable for low-performing hospitals to achieve average performance than for average hospitals to achieve excellence.