Profs. Dranove and Satterthwaite win best paper award

Two of the Kellogg School's distinguished faculty in its Management & Strategy Department have garnered this year's top academic honors, winning the school's prestigious Stanley Reiter Best Paper Award.

David Dranove, the Walter J. McNerney Distinguished Professor of Health Industry Management, and Mark Satterthwaite, the A.C. Buehler Professor of Hospital and Health Services, earned the recognition for their research "Is More Information Better? The Effects of 'Report Cards' on Health Care Providers," published in the June 2003 Journal of Political Economy. This study examines the ramifications of public disclosure at the level of the individual doctor or hospital of patient health outcomes to cardiac bypass surgery.

The paper, co-authored with Daniel Kessler and Mark McClellan, illustrates how such disclosure has two effects. It reduces consumer ignorance of the clinical quality that different surgeons and hospitals provide, allowing consumers to make more informed decisions. It also create incentives for surgeons and hospitals to refrain from treating more severely ill patients, given the potential negative mark that disappointing outcomes may have on their records.

To determine which effect dominated in the period that followed the institution of cardiac surgery report cards in New York and Pennsylvania, the authors analyzed national Medicare data of patients who were likely to require bypass surgery. They found that the New York and Pennsylvania programs "led to both selection behavior by providers and to improved matching of patients and hospitals. On net, this led to higher levels of resource use and to worse health outcomes, particularly for sicker patients."

They concluded that "these report cards decreased patient and social welfare" when considered on a short-term horizon. However, their analysis cannot determine if, over a longer term of five years or more, the report cards led hospitals to implement quality improvement programs that reversed this decline in welfare.

The Reiter Best Paper Award was established at the Kellogg School in 2001, during Dipak C. Jain's first year as dean. "One of our goals has been to continue encouraging and recognizing outstanding faculty research," said Dean Jain. "The Reiter Award serves to highlight research excellence in a way that complements how our L.G. Lavengood Outstanding Professor of the Year Award celebrates exemplary classroom teaching. We are proud of our professors’ commitment to both teaching and research excellence," said Dean Jain.

The award is named in honor of Stanley Reiter, the Morrison Professor of Economics, Mathematics and Managerial Economics and Decision Sciences. "It was easy for us to determine a name for the award," said Robert Magee, senior associate dean, faculty and research. "Stanley Reiter's arrival here in 1967 was a watershed event in the research life of the Kellogg faculty, and Stanley continues to provide both inspiration and insights today."

Magee, along with five other senior Kellogg School faculty members, formed the selection committee that evaluated submissions for the Reiter Award, which is bestowed annually on the academic article judged "best" among those published by Kellogg School professors in the preceding four calendar years.

Said Prof. Dranove: "Kellogg faculty members are thought leaders in so many areas of research. It is an honor to be acknowledged by our peers for our own research efforts. It is especially gratifying to receive this award in light of the high standards set by Stan Reiter as well as the amazing quality of the research done by previous award winners."

Those prior recipients are: Timothy Feddersen, the Wendell Hobbs Professor of Managerial Politics (2002 winner); Alvaro Sandroni, the Mechthild Esser Nemmers Professor of Managerial Economics and Decision Sciences (2003); and J. Peter Murmann, assistant professor of management and organizations (2004).

In November 2003, “Is More Information Better?” also won the Tenth Annual Health Care Research Award from the National Institute for Health Care Management Foundation.

— Matt Golosinski