The value of relationships in healthcare

Many interactions between buyers and sellers occur in the context of relationships. In healthcare markets, the patient-primary care physician (PCP) relationship is one common example. I provide evidence that patient-PCP relationships are valued by patients and are good for patients’ health. In response to an exogenous loss of a longstanding PCP, adverse events increase: patient mortality increases by 4%, emergency department visits increase by 4%, and hospital admissions increase by 3%. Adverse events increase with the length of the exiting PCP-patient relationship, suggesting that relationships contain non-transferable information that positively impacts patients’ health.