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This paper aims to investigate how patient satisfaction affects propensity to return, i.e. loyalty.

Data from 678 hospitals were matched using three sources. Patient satisfaction data were obtained from Press Ganey Associates, a leading survey firm; process‐based quality measures and hospital characteristics (such as ownership and teaching status) and geographic areas were obtained from the Centers for Medicare and Medicaid Services. The frequency with which end‐of‐life patients return to seek treatment at the same hospital was obtained from the Dartmouth Atlas. The study uses regression analysis to estimate satisfaction's effects on patient loyalty, while holding process‐based quality measures and hospital and market characteristics constant.

There is a statistically significant link between satisfaction and loyalty. Although satisfaction's effect overall is relatively small, contentment with certain hospitalization experience may be important. The link between satisfaction and loyalty is weaker for high‐satisfaction hospitals, consistent with other studies in the marketing literature.

The US hospitals analyzed are not a random sample; the results are most applicable to large, non‐profit teaching hospitals in competitive markets.

Satisfaction ratings have business implications for healthcare providers and may be useful as a management tool for private and public purchasers.

The paper is the first to show that patient satisfaction affects actual hospital choices in a large sample. Because patient satisfaction ratings are also correlated with other quality measures, the findings suggest a pathway through which individuals naturally gravitate toward higher‐quality care.