How Costly Is Hospital Quality? A Revealed-Preference Approach

One of the most important and vexing issues in health care concerns the cost to improve quality. Unfortunately, quality is difficult to measure and potentially confounded with productivity. Rather than relying on clinical or process measures, we infer quality at hospitals in greater Los Angeles from the revealed preference of pneumonia patients. We then decompose the joint contribution of quality and unobserved productivity to hospital costs, relying on heterogeneous tastes among patients for plausibly exogenous quality variation. We find that more productive hospitals provide higher quality, demonstrating that the cost of quality improvement is substantially understated by methods that do not take into account productivity differences. After accounting for these differences, we find that a quality improvement from the 25th percentile to the 75th percentile would increase costs at the average hospital by nearly fifty percent. Improvements in traditional metrics of hospital quality such as risk-adjusted mortality are more modest, indicating that other factors such as amenities are an important driver of both hospital costs and patient choices.

How Costly Is Hospital Quality? A Revealed-Preference Approach

Abstract The cost of quality improvement is an important issue in health care. Unfortunately, quality is di¢ cult to measure and potentially confounded with productivity. We infer quality at hospitals in greater Los Angeles from the revealed preference of patients. The resulting measure -which we call "revealed quality" -embodies all aspects of the hospital experience which patients observe and value, potentially including patient amenities as well as clinical quality. We …nd that hospitals are highly di¤erentiated in revealed quality, and that this quality measure is only modestly correlated with a standard measure of clinical quality (risk-adjusted mortality rates). We then determine the cost of revealed quality, appealing to heterogeneity in patient tastes and locations for exogenous quality variation. An inter-quartile increase in quality would raise costs by 48.2% at an otherwise average hospital. More productive hospitals supply higher revealed quality; when this relationship is ignored, the cost of quality is substantially understated. We also …nd that the cost of an inter-quartile increase in clinical quality is only 12.3%. Altogether, these …ndings suggest that non-clinical aspects of the hospital experience may be important determinants of both hospital demand and costs

How Costly Is Hospital Quality? A Revealed-Preference Approach

Abstract We analyze the cost of quality improvement in hospitals, dealing with two challenges. Hospital quality is multidimensional and hard to measure, while unobserved productivity may in ‡uence quality supply. We infer the quality of hospitals in Los Angeles from patient choices. We then incorporate 'revealed quality' into a cost function, instrumenting with hospital demand. We …nd that revealed quality di¤erentiates hospitals, but is not strongly correlated with clinical quality. Revealed quality is quite costly, and tends to increase with hospital productivity. Thus, non-clinical aspects of the hospital experience (perhaps including patient amenities) play important roles in hospital demand, competition, and costs. We wish to than

California Ambulatory Surgery Centers: A Comparative Statistical and Regulatory Description

Describes the state of ambulatory surgery centers (ASC) that compete with hospitals to provide outpatient surgery services. Compares ASC and hospital patients, the various ASC categories, and the regulatory environments in California and other states

The Impact of Air Quality on Hospital Spending

Examines the costs of California's failure to meet federal air quality standards to payers of hospital care in emergency room visits for asthma and hospitalizations for respiratory and cardiovascular causes. Discusses implications for public programs

Variations in outcomes of hemodialysis vascular access by race/ethnicity in the elderly

ObjectivePrevalence of end-stage renal disease, modality of treatment, and type of hemodialysis vascular access used varies widely by race/ethnicity in the United States, but outcomes of hemodialysis vascular access by race/ethnicity are poorly described. The objective of this study is to evaluate variations in outcomes of hemodialysis vascular access in the elderly by race/ethnicity.MethodsMedicare outpatient, inpatient, and carrier files were queried from 2006 to 2011 for beneficiaries that were age ≥66 years and dialysis-dependent at time of index fistula/graft creation, qualified for Medicare by age only, and were continuously enrolled in Medicare 12 months before and after index fistula/graft creation. Primary outcome measures were early vascular access failure and 12-month failure-free survival, specifically, the variation in the difference between fistula and graft in non-White vs White race/ethnicity groups.ResultsFistulas comprised a smaller proportion of index procedures performed in Blacks (65.9%; P < .001) and Asians (71.4%; P < .001), compared with Whites (78.0%) with no difference in Hispanics (78.7%; P = .59). Incidence of early failure after graft vs fistula was Whites, 34.9% vs 43.5% (P < .001), Blacks, 32.9% vs 49.1% (P < .001), Asians, 30.8% vs 40.5% (P = .014), and Hispanics 35.2% vs 43.2% (P = .005). The difference in early failure after fistula vs graft in Blacks was significantly larger than the difference in Whites (P < .001). The 12-month failure-free survival after index graft vs fistula was Whites 41.9% vs 38.9% (P = .008), Blacks 48.5% vs 37.3% (P < .001), Asians 51.6% vs 45.2% (P = .98), and Hispanics 51.9% vs 42.2% (P < .001). The difference in 12-month failure-free survival after graft vs fistula in Blacks and in Hispanics was larger than the difference in Whites (P < .001 and P = .02, respectively).ConclusionsOutcomes of fistulas vs grafts in the elderly vary significantly by race/ethnicity. The decreased risk of early failure after graft vs fistula creation is larger in Blacks compared with Whites. The higher failure-free survival at 12 months after graft vs fistula creation is larger in Blacks compared with Whites and trends toward being larger in Hispanics compared with Whites