Individuals do not walk off the street and into a hospital for major surgery. They are usually referred to a hospital by a physician. Although a patient's preference for a hospital that may be conveniently located or where prior hospitalization has occurred may influence a physician's decision, the hospital at which the physician has staff admitting privileges is a major factor in determining what hospital will be chosen. When a patient is ill, it is often the physician's information and advice that is sought for the most suitable hospital.

It appears, however, that patients are often sent to hospitals that may not be the best choice for a particular procedure. For example, recent evidence has confirmed that mortality rates for cardiac surgery are lower in hospitals that perform a greater number of these procedures. Yet more than half of all hospitals in the United States do fewer than the optimal number of cardiac surgeries to achieve proficiency. The optimal number recommended by the Department of Health and Human Services is at least 200 a year, although the establishment of a precise number may be open to question.

With an increased volume of surgeries, the surgical team may be better able to work together through increased experience or may be better able to anticipate emergencies.

Why might physicians refer patients to hospitals with less experience? First, a physician may have an allegiance to a hospital because of staff privileges. His or her office may be convenient to a particular hospital. Some hospitals have even provided physicians with low-interest loans to be able to build these nearby offices.

There might also be more tangible financial incentives for physicians to use particular hospitals. For example, a hospital may allow only those cardiologists who admit a large number of patients to the hospital the opportunity to interpret the electrocardiogram (EKG) results of other hospital admissions. These EKG results can usually be read in less than five minutes by physicians, who can be reimbursed up to $50 a reading by Blue Shield.

Moreover, hospitals may institute physician referral services whereby those physicians who admit the most patients will be most frequently mentioned when new patients inquire.

Suppose, however, physicians were liable for where they sent patients. Suppose that if an unsatisfactory outcome occurred, the referring physician would bear legal responsibility for having chosen the hospital, in the same way that under the malpractice laws legal responsibility may be borne by physicians who provide diagnoses outside the bounds of generally accepted medical practice.

Physicians would then have incentives to send individuals to quality hospitals consistent with the priorities of convenience and other attributes desired by the patient.

As a result, hospitals that had suboptimal quality would lose patients and might have to eliminate or close their poorer departments. Hospitals with superior quality would have an even greater number of patients.

Moreover, health care costs would be reduced, since the fixed costs of surgery may be spread over a greater number of patients, and economies of scale would be realized.

In addition, the current problem of surplus hospital beds could be solved not by regulations known as certificate-of-need, where government agencies decide which hospitals or hospital beds to eliminate, but by allowing the physician to be the patient's advocate in a competitive system.

Recent publication of hospital mortality rates by government agencies and groups of business firms will be helpful in increasing the public's awareness of differences in quality among hospitals. However, these statistics may not be able to convey the full picture of the hospital's quality. For example, mortality rates may not be adjusted for illness severity of the patient mix. Moreover, most people have surgery so infrequently, if at all, that those data can become obsolete.

In contrast, physicians should know which are the better hospitals in the same way that any member of any profession or organization knows who are the superior members.

Physicians simply need the appropriate incentives to pass this information on to their patients. Making physicians liable for their hospital referrals will help ensure that the physician will be the patient's advocate in selecting the best hospitals.

Warren Greenberg, PhD, is an economist and an associate professor in the department of health services administration at the George Washington University. He is writing a book on competition, regulation and rationing in the health care sector. Second Opinion is a forum for points of view on health policy issues.