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On measuring the hospital cost|quality trade-off

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Author Info
Kathleen Carey (US Department of Veterans Affairs Management Science Group, Bedford, MA, USA)
James F. Burgess (US Department of Veterans Affairs Management Science Group, Bedford, MA, USA)
Abstract

This paper explores the relationship between cost and quality of hospital care. A total operating cost function is estimated for 137 US Department of Veterans Affairs hospitals for 1988-1993 using three rate-based measures of quality as regressors. The high likelihood of the existence of measurement error in quality in the cross section leads to the application of novel instrumental variable techniques. Results suggest that mortality and readmission indices are adjusted inadequately for illness severity. The measure on the failure to follow up inpatient discharges with outpatient care, however, appears to increase cost. The results of this paper underscore a number of practical difficulties and challenges facing government or other systems in evaluating the relative performance of their hospitals. Copyright © 1999 John Wiley & Sons, Ltd.

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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 8 (1999)
Issue (Month): 6 ()
Pages: 509-520
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:hlthec:v:8:y:1999:i:6:p:509-520

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Grannemann, Thomas W. & Brown, Randall S. & Pauly, Mark V., 1986. "Estimating hospital costs : A multiple-output analysis," Journal of Health Economics, Elsevier, vol. 5(2), pages 107-127, June. [Downloadable!] (restricted)
  2. Gertler, Paul J & Waldman, Donald M, 1992. "Quality-Adjusted Cost Functions and Policy Evaluation in the Nursing Home Industry," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1232-56, December. [Downloadable!] (restricted)
  3. Vita, Michael G., 1990. "Exploring hospital production relationships with flexible functional forms," Journal of Health Economics, Elsevier, vol. 9(1), pages 1-21, June. [Downloadable!] (restricted)
  4. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February. [Downloadable!] (restricted)
    Other versions:
  5. Conrad, Robert F & Strauss, Robert P, 1983. "A Multiple-Output Multiple-Input Model of the Hospital Industry in North Carolina," Applied Economics, Taylor and Francis Journals, vol. 15(3), pages 341-52, June.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Suthathip Yaisawarng & James F. Burgess, 2006. "Performance-based budgeting in the public sector: an illustration from the VA health care system," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 295-310. [Downloadable!]
  2. Mehdi Farsi & Geert Ridder, 2006. "Estimating the out-of-hospital mortality rate using patient discharge data," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 983-995. [Downloadable!]
    Other versions:
  3. Niccie L. McKay & Mary E. Deily, 2008. "Cost inefficiency and hospital health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 17(7), pages 833-848. [Downloadable!]
  4. Mary E. Deily & Niccie L. McKay, 2006. "Cost inefficiency and mortality rates in Florida hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 419-431. [Downloadable!]
  5. Juha Laine & Miika Linna & Unto Häkkinen & Anja Noro, 2005. "Measuring the productive efficiency and clinical quality of institutional long-term care for the elderly," Health Economics, John Wiley & Sons, Ltd., vol. 14(3), pages 245-256. [Downloadable!]
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