The impact of quality on the demand for outpatient services in Cyprus

Health policy reforms in a number of countries seek to improve provider quality by sharpening the incentives they face, for example by exposing them to greater competition. For this to succeed, patients must be responsive to quality in their choice of provider. This paper uses data from Cyprus to estimate the effect of quality on patients' choice between public and private outpatient care. It improves on the existing literature by using a more comprehensive set of quality attributes which allows the dimensions of quality that have the largest effect on patient choice of provider to be identified. We also introduce an innovative way of measuring patients' perceptions of quality in a household survey. We find that patients' choice of provider is sensitive to quality, and that interpersonal quality is more important than either technical quality or system-related factors.