Authors aim to quantify nonprofit hospitals’ spending on management consultants and to evaluate changes in finances, operations, and quality of care following the initiation of a contract with a management consulting firm. Observational study compares 306 U.S. nonprofit hospitals that used a management consultant firm for the first time in 2010-2022 with 513 matched hospitals that did not use management consultants during 2009–2023, measure financial performance (e.g., revenues, expenses, margins, cash reserves, and fixed assets), operational measures (e.g., inpatient utilization, staffing, executive and worker compensation, charity care, and community benefits), and quality-of-care measures (e.g., claims-based 30-day mortality and readmission for acute myocardial infarction, pneumonia, and stroke).

Findings: More than 20% of nonprofit hospitals hired management consultants during the study period. Nonprofit hospitals that hired management consultants collectively spent more than $7.8 billion on these services from 2009 to 2023. Despite this substantial investment, analyses of hospitals’ financial performance, operational decisions, and claims-based patient outcomes revealed little evidence of substantial, statistically significant, or systematic improvements attributable to consulting engagements.

This article features Ashvin Gandhi, affiliate at the UCLA Center for Health Policy Research (CHPR).

Fake product reviews — and the manipulation of reputation systems by sellers more broadly — are a widespread issue for two-sided platforms. Authors study two primary channels through which such manipulation can affect market outcomes: (i) creating misinformation about the reviewed product, and (ii) breeding mistrust in ratings system overall. To examine these in the Amazon.com marketplace, authors measure misinformation by observing products purchasing fake reviews and measure mistrust by eliciting shoppers’ beliefs about the prevalence of fake reviews on Amazon through an incentivized survey experiment. These are incorporated into a structural model of demand in which consumers form beliefs about product quality based on observed reviews and perceptions about their trustworthiness. 

Findings: Counterfactual policy simulations indicate that fake reviews reduce consumer welfare, shift sales from honest to dishonest sellers, and ultimately harm the platform. Welfare losses arise primarily from misinformation that leads to worse purchases. While mistrust also leads to purchasing mistakes, the consumer harms of mistrust are largely offset by increased price competition under a weakened ratings system. Finally, authors identify key limitations in platforms’ incentives to police manipulation and evaluate enforcement alternatives.

Adequate staffing is critical to the effective operation of health care facilities. Yet, most nursing homes staff below the levels that clinicians, researchers, and advocates consider adequate. Various state and federal proposals have aimed to raise staffing through payment reforms and staffing regulations. To understand the impacts of such policies on patient health, authors study a recent Illinois payment reform aimed at increasing staffing at Medicaid-serving facilities.

Findings: In this case-control study, authors found that a Medicaid policy that incentivized high staffing levels was associated with modest improvement in some dimensions of patient health. However, even modest effects are extremely meaningful at scale: these estimates suggest that if a similar reform were adopted nationally, there would be 6,142 fewer hospitalizations each year. While these findings are promising, they leave considerable room for further research. 

Inspections are a common tool for acquiring information and incentivizing compliance. Although inspections are typically unannounced, their timing often follows a predictable schedule. Authors study how this predictability shapes firm effort and patient outcomes in U.S. nursing homes, leveraging detailed administrative data on staffing, care, and health outcomes. Nursing homes "slack" in the low-risk period following an inspection and ramp up effort as their next inspection approaches. Patient survival mirrors this pattern, suggesting that these fluctuations in effort have meaningful consequences for the quality of patient care. Authors embed these estimates in a dynamic model capturing how inspection regimes incentivize effort and provide information about quality. 

Findings: Estimates indicate that moving to unpredictable inspections could induce as much additional effort as increasing the frequency of inspections by 12%, while only minimally reducing their informational value.