Demographics Matter! The Potentially Disproportionate Effect of COVID-19 on Hospital Ratings

Since 2016, the Centers for Medicare and Medicaid Services (CMS) has been displaying HCAHPS Star Ratings on Hospital Compare, which has driven hospitals to improve quality and reduce costs. These ratings measure Medicare beneficiaries’ experience with their health plans and the health care system. We provide evidence that low-rated hospitals have much more variability in patient experience ratings than high-rated ones. Moreover, the experiences at low-rated hospitals are more sensitive to county demographic factors, which means exogenous shocks, like COVID-19, will likely affect these hospitals differently, as such shocks are known to disproportionately affect their communities. Specifically, our results imply that low-rated hospitals with more variability in their HCAHPS responses are more likely to face adverse patient experiences due to COVID-19 than high-rated hospitals.