Modeling the effect of hospital charges and quality on choice.

The authors apply a conditional choice model to simulate the results of patient and physician choices of hospitals for a specific surgical procedure in response to improvements in quality or changes in charges. The model includes all zip code areas and relevant hospitals in a large metropolitan area and estimates the impact on admissions at each hospital. It can be used to estimate both the impact of decisions by a given hospital and the potential responses of competitors, as well as the effects of selective contracting with hospitals by certain payors.