The effect of cost, competition, profit and cost containment policy on hospital quality of care

The effects of cost containment and related factors on hospital quality of care were studied. A major purpose of this study was to explore the usefulness of Peer Review data in quality of care research. National data (50 states) and a 119-hospital sample from three states with strict cost containment activity (Illinois, Vermont, and Virginia) were used. For the national data, states were categorized by the strictness of their cost containment program (data from an original survey). Hospital cost, margin, competition and regulatory variables were used in OLS models on eight different quality of care measures, including five from Peer Review Organization quality assessments, and three using HCFA's mortality statistics. For the sample data, a 2SLS adjustment was used on the margin variable.Three PRO quality measures of patient care management (inappropriate transfers and readmissions, inappropriate denial letters, and inappropriate days of care) were significantly effected by costs, margin and competition. In the national data, higher costs were associated more problems with these quality variables; in the sample data, the absence of neighboring hospital competition was associated with more inappropriate days of care and increased mortality among low-risk heart disease cases. Rural areas of high unemployment, with near-monopoly hospitals, had more quality issues than their more urban counterparts. In general, there was no effect of cost containment activity, by type, on the PRO quality measures, nor was mortality affected by strict state cost containment activity.The data suggest (1) that efforts to associate hospital quality with one measure (eg., costs) provide an incomplete picture of quality issues; (2) that hands-on patient care is not the most important quality issue with cost containment, rather, issues of the quality infastructure are (eg., decisions to transfer).U of I OnlyETDs are only available to UIUC Users without author permissio