Information disclosure about seller quality is common in many markets and is presumed to benefit consumers by allowing them to identify high quality firms. In service industries, there are two competing effects, reallocation and service quality improvement, that determine whether information disclosure is beneficial or harmful. This study has been carried out in the context of a healthcare policy change which was to publish cardiac surgery report cards. Under the assumption that surgeon quality did not change, it was found that the report cards had a detrimental impact on patient welfare due to reallocation of high risk patients to low quality surgeons. This damage is due to the fact that low quality surgeons are relatively poor at treating high risk cases. However, entries, exits, and quality improvement of surgeons had a positive effect on patient surgical outcomes, which benefited all patients. Therefore, the net impact of the publication of the report cards on patient welfare was beneficial.