Disclosing Physician Ratings: Performance Effects and the Difficulty of Altering Ratings Consensus

• Author: HENRY EYRING
• Published date: 01 September 2020
• Date: 01 September 2020
• DOI: http://doi.org/10.1111/1475-679X.12330

DOI: 10.1111/1475-679X.12330

Journal of Accounting Research

Vol. 58 No. 4 September 2020

Printed in U.S.A.

Disclosing Physician Ratings:

Performance Effects and the

Difficulty of Altering Ratings

Consensus

HENRY EYRING∗

Received 13 October 2016; accepted 21 June 2020

ABSTRACT

I examine effects of a health care system’s policy to publicly disclose patient

ratings of its physicians. I find evidence that this policy leads to performance

improvement by the disclosed, subjective ratings and also by undisclosed, ob-

jective measures of quality. These effects are consistent with multitasking the-

ory, in that physicians respond to the disclosure by providing more of a shared

input—time with patients—that benefits performance by ratings and under-

lying quality. I also find, as predicted by information cascade theory, that the

∗The London School of Economics and Political Science.

Accepted by Philip Berger. I thank my dissertation committee—Dennis Campbell (Chair),

V.G. Narayanan, Srikant Datar, and Ananth Raman—along with Robert Kaplan, Ryan Buell,

Robert Huckman, Leemore Dafny, Ian Gow, and an anonymous reviewer for their guidance.

Participants in an American Accounting Association Northeast Region Meeting session, a Har-

vard Business School workshop, and seminars at the University of Chicago, Cornell University,

Notre Dame University, Stanford University,London Business School, the London School of

Economics and Political Science, Tilburg University, Michigan State University,and the Uni-

versity of Utah provided helpful comments. Executives and physicians at University of Utah

Health Care and Massachusetts General Hospital also provided helpful comments. I thank

Robert Kaplan and Srikant Datar for introducing me to the field site, University of Utah Health

Care. I thank University of Utah Health Care administrators and personnel who arranged

for my interaction and data access throughout the organization. An online appendix to this

paper can be downloaded at http://research.chicagobooth.edu/arc/journal-of-accounting-

research/online-supplements.

1023

© 2020 The Authors. Journal of Accounting Research published by Wiley Periodicals LLC on behalf of The

Accounting Research Center at the University of Chicago Booth School of Business

This is an open access article under the terms of the CreativeCommonsAttribution License,

which permits use, distribution and reproduction in any medium, provided the original work is

properly cited.

1024 h. eyring

ratings become jammed to some degree near initially disclosed values. Specif-

ically, raters observe the pattern of initial ratings and follow suit by providing

similar ratings. Finally, I find evidence that physicians anticipate rating jam-

ming and so concentrate their effort on earlier performance in order to set

a pattern of high ratings that later ratings follow. These results demonstrate

that the disclosure of subjective ratings can benefit performance broadly but

can also shift effort toward earlier performance.

JEL codes: D83, D90, I10, I11, L15

Keywords: disclosure; real effects; information cascade; multitasking

1. Introduction

I examine effects of a health care system’s policy to publicly disclose pa-

tient ratings of its physicians. Many organizations, in settings such as retail,

education, and transportation, are similarly disclosing subjective ratings of

their performance.1High ratings can attract revenue when they are dis-

closed (Chevalier and Mayzlin [2006], Hanauer et al. [2014]), and this may

reward high performance in a way that motivates effort provision and af-

fects underlying quality. Although economic and accounting research has

documented performance effects that result from various disclosures (Jin

and Leslie [2003], Christensen et al. [2017]), this literature has not yet

considered dynamics that are at play when disclosure reveals subjective

ratings. Economic theory suggests that these dynamics may affect perfor-

mance across subjective and objective measures, and may also create incen-

tives to shift effort over time. I address these ideas empirically using data

from a health care system.

My study’s field site, University of Utah Health Care (UUHC), imple-

mented a policy in 2012 to disclose ratings for each of its physicians who

had received at least 30 ratings in the preceding 12 months.2Idrawon

detailed, patient-visit-level data on multiple measures of performance for

physicians, who were either included in or excluded from disclosure based

on the number of ratings they had previously received. Using difference-

in-differences (DiD) analysis, I compare changes around the time of dis-

closure for these groups of physicians. My models control for flexible time

trends, static differences among physicians, and an extensive set of patient

and visit characteristics. I use this identification strategy to provide initial

evidence on performance effects of the spreading disclosure of subjective

ratings.

1For example, eBay discloses ratings of its product sellers (eBay [2020]), Uber discloses

ratings of its rideshare drivers (Uber [2020]), the city of San Francisco discloses ratings of its

local government (City Performance Team [2019]), and the state of Texas requires that its

state-run universities disclose ratings of their faculty members (TexasTech University [2020]).

2“Physician ratings” is one of the popular terms used to describe patient ratings of physi-

cians (Glover [2014]), and I adopt this terminology.

disclosing physician ratings 1025

Research on disclosure’s performance effects has shown that, when per-

formance by disclosed measures attracts revenue or investment, this pro-

duces reputational incentives that can lead to improvement by disclosed

measures (Jin and Leslie [2003], Christensen et al. [2017]). I find that

the disclosure of physician ratings produces similar reputational incentives

in my setting. Specifically, I show that rating disclosure directs patients to

higher-rated physicians and that this leads to a roughly 12% increase in pay

for these physicians. Although these incentives would plausibly lead to im-

proved performance by ratings, it is not theoretically straightforward how

this will affect performance by objective measures of quality. On one hand,

some practitioners and scholars have predicted that effort to improve per-

formance by ratings may divert effort away from, and thereby harm, per-

formance by objective measures (Friedberg, Safran, and Schneider [2012],

Bond [2015]). On the other hand, multitasking theory on input-sharing

suggests that effort to improve performance by ratings could work through

shared inputs to boost performance by objective measures (Feltham and

Xie [1994], Mullen, Frank, and Rosenthal [2010]).

Motivated by this tension, I test how rating disclosure affects perfor-

mance by the disclosed, subjective ratings and by undisclosed, objective

measures of quality. Health economics research suggests that physician

ratings and objective measures of medical quality share some inputs,

including the time that a physician spends with a patient.3Using data from

computer timestamps during visits, I estimate that rating disclosure leads

physicians to spend roughly 25% more time with each patient.4Ithen

show that rating disclosure works partly through this increase in physician

time with patients to improve performance by subjective ratings and

objective quality measures.5These performance effects are enough to lift

a physician with median ratings toward the top of the predisclosure rating

distribution and to boost performance on objective quality measures by

roughly 37%.

3Friedberg, Safran, and Schneider [2012] provide a survey of literature that demonstrates a

positive relationship between physician ratings and objective measures of medical quality, Lin

et al. [2001] document a positive relationship between physician time spent with patients and

physician ratings, and Neprash [2016] documents a positive relationship between physician

time spent with patients and objective measures of medical quality.

4See Hribar et al. [2015] for evidence validating the use of timestamps from electronic

health records to measure physician time spent with patients.

5In a supplemental analysis, I examine whether the increase in physician time with patients

occurs through a decrease in patient volume. I find instead that the increase in physician time

with patients occurs along with an increase in visit volume. This is plausible in light of sur-

vey data that suggest that physicians spend the majority of their time in the office away from

patients (Sinsky et al. [2016]), time that can be redirected to patients through better office

management. In line with that explanation for the increase in physician time with patients,

physicians at UUHC reported increasing time with patients by delegating clerical work and us-

ing electronic notifications to keep better track of when patients were waiting for the physician

to enter an examination room.