Measuring Efficiency: The Association of Hospital Costs and Quality of Care

The U.S. health care system faces two challenges: increased costs and concerns about quality.  It is argued that low-cost hospitals are more efficient with better management and are therefore able to provider higher-quality care. 

3,794 hospitals were included in the analysis. A relative cost index was calculated for each hospital, taking into account patient mix, geographic and socioeconomic variation, and the pursuit of missions such as teaching, research and service to indigent populations.  These costs were compared to three hospital characteristics: nurse-to-census ratio, for-profit/not-for-profit status, and percentage of patients who had Medicare insurance.  These characteristics were chosen as additional markers for hospitals with lower costs. Quality metrics were chosen for three conditions: acute myocardial infarction (AMI), congestive heart failure (CHF), and pneumonia. 

Hospitals in the lowest cost quartile were more likely to be for-profit (25% vs. 17% vs. 14% vs. 10%), had a greater percentage of Medicare patients (48% vs. 46% vs. 45% vs. 44%), and had a lower nurse-to-census ratio (5.3 vs. 5.7 vs. 5.8 vs. 6.4, per 1,000 patient days).  Hospitals in the lowest cost quartile also had marginally lower AMI performance and lower CHF performance.  There was no relationship between risk-adjusted hospital costs and performance on the pneumonia performance metrics.  Overall, there was no evidence that low-cost hospitals provided higher quality of care. 

 

Commentary:

Regardless of the quality of care provided, this nation cannot afford to neglect the rising costs of our system; in addition, while we cut back on our health care expenditures, we must not sacrifice the quality of care that is provided.  While certain hospital characteristics might be deemed cost-saving measures (fewer nurses, for-profit status, and increased Medicare patient population), there are other areas for efficiency that should be analyzed for their possible impact on patient care.  Top of the list: Increased health information technology is posited to increase compliance with quality metrics while also decrease long-term overhead administrative costs of medical records and communications.  Instead of looking for a general hypothesis on low-cost hospitals, we should instead be highlighting those individual facilities that achieve both goals.

Health Affairs, Vol 28, No.3 (2009): 897-906

 

by

Kameron L. Matthews, MD, Esq.