Do health systems respond to the quality of their competitors?

ABSTRACT

OBJECTIVES: Some large employers and healthcare analysts have advocated for retail competition that relies on providers competing on performance metrics to improve care quality. Using publicly available performance measures, we determined whether health systems increased the quality of diabetes care provided by their clinics based on performance relative to competitors. STUDY DESIGN: Our analysis examined publicly reported performance measures of diabetes care from 2006 to 2013 for clinics in Minnesota health systems. METHODS: We obtained data for 654 clinics, of which 572 publicly reported diabetes care performance. Because some clinics did not report performance, we estimated a Heckman selection model. First, we predicted whether or not clinics reported performance. Second, we estimated the effect of relative performance (a clinic's performance minus the mean performance of clinics in competing health systems) on clinic performance using the results of the reporting model to control for selection into the sample of reporting clinics. RESULTS: Although diabetes care performance improved during our study, health systems did not differentially improve the diabetes care performance of their clinics performing worse than clinics in competing systems. This result indicates divergence between high-performing and low-performing clinics. This result does not appear to be due to risk selection. CONCLUSIONS: Publicly reporting quality information did not incentivize health systems to increase the performance of their clinics with lower performance than competitors, as would be expected under retail competition. Our results do not support strategies that rely on competition on publicly reported performance measures to improve quality in diabetes care management.