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Hospital financial condition and the quality of patient care

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  • Gloria J. Bazzoli
  • Hsueh‐Fen Chen
  • Mei Zhao
  • Richard C. Lindrooth

Abstract

Concerns about deficiencies in the quality of care delivered in US hospitals grew during a time period when an increasing number of hospitals were experiencing financial problems. Our study examines a six‐year longitudinal database of general acute care hospitals in 11 states to assess the relationship between hospital financial condition and quality of care. We evaluate two measures of financial performance: operating margin and a broader profitability measure that encompasses both operating and non‐operating sources of income. Our model specification allows for gradual adjustments in quality‐enhancing activities and recognizes that current realizations of patient quality may affect future financial performance. Empirical results suggest that there is a relationship between financial performance and quality of care, but not as strong as suggested in earlier research. Overall, our results suggest that deep financial problems that go beyond the patient care side of business may be important to prompting quality problems. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • Gloria J. Bazzoli & Hsueh‐Fen Chen & Mei Zhao & Richard C. Lindrooth, 2008. "Hospital financial condition and the quality of patient care," Health Economics, John Wiley & Sons, Ltd., vol. 17(8), pages 977-995, August.
  • Handle: RePEc:wly:hlthec:v:17:y:2008:i:8:p:977-995
    DOI: 10.1002/hec.1311
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    References listed on IDEAS

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    Cited by:

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    2. Fareed, Naleef & Bazzoli, Gloria J. & Farnsworth Mick, Stephen S. & Harless, David W., 2015. "The influence of institutional pressures on hospital electronic health record presence," Social Science & Medicine, Elsevier, vol. 133(C), pages 28-35.
    3. Cyril Chang & Jennifer Troyer, 2009. "The impact of TennCare on hospital efficiency," Health Care Management Science, Springer, vol. 12(3), pages 201-216, September.
    4. Daniel F. McCaffrey & J. R. Lockwood & Kata Mihaly & Tim R. Sass, 2012. "A review of Stata commands for fixed-effects estimation in normal linear models," Stata Journal, StataCorp LP, vol. 12(3), pages 406-432, September.
    5. Katarzyna Dubas-Jakóbczyk & Ewa Kocot & Anna Kozieł, 2020. "Financial Performance of Public Hospitals: A Cross-Sectional Study among Polish Providers," IJERPH, MDPI, vol. 17(7), pages 1-14, March.
    6. Michael Kourtis & Panayiotis Curtis & Michael Hanias & Eleftherios Kourtis, 2021. "A Strategic Financial Management Evaluation of Private Hospitals’ Effectiveness and Efficiency for Sustainable Financing: A Research Study," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 1025-1054.
    7. Ren, Junqiushi, 2023. "Financial conditions and incumbent quality responses to entry: Evidence from airlines' on-time performance," Journal of Air Transport Management, Elsevier, vol. 107(C).
    8. Cardinaels, Eddy, 2009. "Governance in non-for-profit hospitals: Effects of board members' remuneration and expertise on CEO compensation," Health Policy, Elsevier, vol. 93(1), pages 64-75, November.
    9. Rafal Siedlecki & Pawel Predkiewicz & Agnieszka Bem & Aleksandra Szpulak, 2021. "Working Capital Management in Hospitals: Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 836-850.
    10. Hsueh-Fen Chen & Gloria Bazzoli & Hui-Min Hsieh, 2009. "Hospital Financial Conditions and the Provision of Unprofitable Services," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 37(3), pages 259-277, September.
    11. Dean D Akinleye & Louise-Anne McNutt & Victoria Lazariu & Colleen C McLaughlin, 2019. "Correlation between hospital finances and quality and safety of patient care," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-19, August.
    12. Spaulding, Aaron & Zhao, Mei & Haley, D. Rob, 2014. "Value-based purchasing and hospital acquired conditions: Are we seeing improvement?," Health Policy, Elsevier, vol. 118(3), pages 413-421.
    13. András Kiss & Norbert Kiss & Balázs Váradi, 2023. "Do budget constraints limit access to health care? Evidence from PCI treatments in Hungary," International Journal of Health Economics and Management, Springer, vol. 23(2), pages 281-302, June.
    14. Agnieszka Bem & Rafał Siedlecki & Paweł Prędkiewicz & Patrizia Gazzola & Bożena Ryszawska & Paulina Ucieklak-Jeż, 2019. "Hospitals’ Financial Health in Rural and Urban Areas in Poland: Does It Ensure Sustainability?," Sustainability, MDPI, vol. 11(7), pages 1-17, April.
    15. Michael Rosko & Mona Al-Amin & Manouchehr Tavakoli, 2020. "Efficiency and profitability in US not-for-profit hospitals," International Journal of Health Economics and Management, Springer, vol. 20(4), pages 359-379, December.
    16. Gaure, Simen, 2013. "OLS with multiple high dimensional category variables," Computational Statistics & Data Analysis, Elsevier, vol. 66(C), pages 8-18.
    17. Yu-Chu Shen & Karen Eggleston, 2009. "The effect of soft budget constraints on access and quality in hospital care," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 211-232, June.
    18. Hauck, Katharina & Zhao, Xueyan & Jackson, Terri, 2012. "Adverse event rates as measures of hospital performance," Health Policy, Elsevier, vol. 104(2), pages 146-154.
    19. Sara Jamalabadi & Vera Winter & Jonas Schreyögg, 2020. "A Systematic Review of the Association Between Hospital Cost/price and the Quality of Care," Applied Health Economics and Health Policy, Springer, vol. 18(5), pages 625-639, October.

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