Hospitals as Hotels

Is it that people love a good movie selection, or do they take the movies to be the best available signal of hospital quality?

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% 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.

Here is the paper.  The ungated copy is here.  Here is a recent article of relevance:

When the Sacred Heart Medical Center at RiverBend opens in Springfield, Ore., in August 2008, patients and their families will enter a hospital surrounded by wetlands and Douglas firs. Inside, they’ll encounter multiple fireplaces, coffee shops and visitors’ lounges.

"As you come to the hospital, you’ll be greeted warmly as you enter, much as you would by a concierge at a hotel," says Adam Kerner, an executive architect with Anshen + Allen, who partnered on RiverBend with an outside architect whose previous experience had been in designing resorts…

Gerard van Grinsven, president of the Henry Ford West Bloomfield Hospital now under construction in suburban Detroit, says area hospital executives were surprised when he was hired away from hotelier Ritz-Carlton in 2006. Up to then, his two-decade career had been exclusively in hotels and resorts.

But skepticism soon gave way to curiosity and competitiveness, van Grinsven says. In fact, Beaumont Hospitals in nearby Royal Oak, Mich., hired a Ritz-Carlton executive as their director of hospitality a short while later.

Van Grinsven is introducing a bit of the Ritz-Carlton flair to the new hospital, adding touches like mini-hotel rooms for visitors as well as healthy cooking classes for the surrounding community. The facility, which opens in July 2008, will include larger-than-normal emergency patient rooms–roughly 150 square feet–to create more space for visitors, a result of design sessions that included input from patients, nurses and doctors.