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Hospitals as Hotels


Hospitals may be more recession-proof than many other industries, but they are hardly immune. If you are running a hospital these days and want keep your beds full, what should you do: Try to raid your competitors for the best doctors available? Undertake an ad campaign that trumpets the excellence of your care? Or maybe just install wireless internet and spruce up the rooms?
According to a new working paper called “Hospitals as Hotels” by Dana Goldman and John A. Romley, both of RAND, that last option — improving the hospital’s patient amenities — might be the best investment. (Abstract is here, PDF is here.) As they summarize:
“Amenities such as good food, attentive staff, and pleasant surroundings may play an important role in hospital demand. We use a marketing survey to measure amenities at hospitals in greater Los Angeles and analyze the choice behavior of Medicare pneumonia patients in this market. We find that the mean valuation of amenities is positive and substantial. From the patient perspective, hospital quality therefore embodies amenities as well as clinical quality. We also find that a one-standard-deviation increase in amenities raises a hospital’s demand by 38.4 percent on average, whereas demand is substantially less responsive to clinical quality as measured by pneumonia mortality. These findings imply that hospitals may have an incentive to compete in amenities, with potentially important implications for welfare.”
I find this mildly disheartening but not very surprising. The hospital that my family and many friends use in New York has extraordinary medical personnel and great outcomes but facilities that leave quite a bit to be desired.
There is a constant mental struggle between acknowledging how good the care is while facing how unpleasant the surroundings can be. So far, we’ve stuck with it — but I can imagine a first-time patient walking in there and deciding, merely because of the lack of amenities, not to become a second-time patient.