Abstract:
Patients often rely on personal interactions with health care providers to form and update their beliefs about quality. In this study, we examine the role played by initial patient-provider interactions in determining the demand for elective surgery, a setting in which patients and providers interact in two well-defined phases: initial diagnosis and, if appropriate, surgery. We implemented an experiment in a low-cost cataract surgery clinic in Mexico City, in which we randomized the price of a “premium” diagnostic consultation meant to increase perceptions of clinic quality by improving the consumer experience. Demand for the premium consultation is downward sloping and highly nonlinear. Using the price randomization to instrument for premium consultation take-up, we find that improving the quality of the initial patient-provider interaction dramatically increases the probability of surgery take-up (which is two orders of magnitude more expensive than the diagnostic session) for those with positive diagnoses. The large price elasticity of demand for the premium consultation suggests that investing in improving the quality of initial interactions can substantially increase the subsequent demand for health care.