Measuring efficiency: the association of hospital costs and quality of care

Ashish K Jha, E John Orav, Allen Dobson, Robert A Book, Arnold M Epstein
Health Affairs 2009, 28 (3): 897-906
Providers with lower costs may be more efficient and, therefore, provide better care than those with higher costs. However, the relationship between risk-adjusted costs (often described as efficiency) and quality is not well understood. We examined the relationship between hospitals' risk-adjusted costs and their structural characteristics, nursing levels, quality of care, and outcomes. U.S. hospitals with low risk-adjusted costs were more likely to be for-profit, treat more Medicare patients, and employ fewer nurses. They provided modestly worse care for acute myocardial infarction and congestive heart failure but had comparable rates of risk-adjusted mortality. We found no evidence that low-cost providers provide better care.

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