Steering them softly with a quality label? A case study analysis of a patient channelling strategy without financial incentives

Steering patients to lower priced and/or higher quality providers can increase the value of a healthcare system. In a managed care setting, health insurers may use financial incentives for this purpose. However, introducing cost-sharing differences among providers may cause enrolee discontent, which may result in disenrollment. Simply informing and guiding enrolees to preferred providers without financial incentives may therefore be an attractive alternative for insurers. But the effectiveness of such a soft channelling strategy is unclear. This paper investigates whether a Dutch health insurer's strategy of designating preferred hospitals for breast cancer surgery and for inguinal hernia repair affected its enrolees' hospital choices. In October 2008, preferred hospitals received a quality label (‘TopCare’) because of their high-quality performances in previous years. The insurer recommended these hospitals to enrolees without a financial incentive. Individual patient-level claims data from the insurer over a 5-year period (2006–2010) and a conditional logit choice model was used. Our study samples for breast cancer surgery and inguinal hernia repair included 7985 and 17,292 patients, respectively. It is found that for both procedures, patients ex ante already had a certain preference for the hospitals designated by the insurer as top-quality providers, even when considering possible additional travel time. Also, for both procedures, patient choice did not differ significantly before and after the launch of the TopCare label. The quality label did not increase patient demand for preferred hospitals. Thus, the insurer's strategy to steer patients to preferred hospital alternatives without a financial incentive was not effective.