Hospital Costs and Quality

Research published in the Archives of Internal Medicine looks at the relationship between hospital costs and quality.  (Archives Article) (Abstract Only)  The population studied was Medicare beneficiaries with CHF or pneumonia hospitalizations.  Costs were derived from Medicare data and adjusted for patient, hospital and community characteristics.  Four performance measures for CHF and seven for pneumonia were used.  CHF and pneumonia are the top two diagnoses for Medicare hospital admissions and also have the highest rates for readmission.  Care and costs at over 3000 hospitals were included in the study.

To give a sense of the range of costs, the median cost for a CHF admission was $7114, but the range is $1522 to $18,927.  That is quite a range.  High-cost hospitals tended to stay high-cost over time and vice versa.  Hospitals that were high cost for one condition tended to be so for the other.  For CHF, hospitals in the highest cost quartile had better performance on the quality indicators and lower mortality.  But for pneumonia, high cost hospitals had lower quality performance and higher mortality than did low cost ones.  Readmission rates were similar, perhaps slightly higher in low cost facilities, but overall inpatient costs in the 6 months following admission were lower in the low cost facilities.

The results suggest that hospitals with higher costs do not have consistently better quality over all reasons for admission.  Considering how much higher those costs are, it is very low value.  In addition, this study debunks the notion that low cost hospitals keep costs reduced by pushing patients out of the hospital sooner, thereby causing more inpatient costs in future months and higher overall costs.  Just more evidence that there is little justification for the costs of many hospitals, costs which translate to higher prices for payers and patients.