Specialized service offerings and patients' choice of hospital: the case of cardiac catheterization.

Patients' choice of hospital is modeled as a function of their expectation of needing a specialized service (option demand). The estimation tests whether cardiac patients' choice of hospital responds to changes over time in the availability of a specialized cardiac service. Results suggest that availability of cardiac catheterization has a strong, significant effect on the choice of hospital, even after controlling for other quality characteristics. However, the effect appears confined to those patients whose diagnosis indicates some probability of needing the service. Patients with no 'option demand' do not appear to use specialized services as a signal of quality.