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Exploring the relationship between costs and quality - Does the joint evaluation of costs and quality alter the ranking of Danish hospital departments?

Author

Listed:
  • Anne, Hvenegaard

    () (Danish Institute for Health Services Research)

  • Nielsen Arendt, Jacob

    () (University of Southern Denmark - Research Unit for Health Economics)

  • Gyrd-Hansen, Dorte

    () (Danish Institute for Health Services Research)

  • Street, Andrew

    (University of York-Centre for Health Economics)

Abstract

Objective: The purpose is to assess whether the joint evaluation of costs and quality affects the ranking of hospital departments relative to performance based on cost performance alone. Methods: Using patient level data, in which 3,754 patients across six vascular departments are pooled we estimate fixed effect models for costs (linear) and quality (logistic). We consider two quality measures; mortality and wound complications. To assess whether the joint evaluation of costs and quality affects the ranking of departments, we construct joint confidence regions for each pair of departmental effects for costs and quality by using a bootstrap method and rank departments according to their costeffectiveness ratio. Results: The association between cost and quality differs depending on how which quality is measured. Lower costs tend to associate with higher mortality, implying a cost-quality trade-off. In contrast there is no clear association between costs and wound complications among vascular departments. Conclusions: Compared to benchmarking of departments based solely on their costs, we show that the ranking of departments may be altered considerably when quality is taken into account. Consequently, it is important to have a well-rounded view of departmental objectives when undertaking performance evaluation.

Suggested Citation

  • Anne, Hvenegaard & Nielsen Arendt, Jacob & Gyrd-Hansen, Dorte & Street, Andrew, 2010. "Exploring the relationship between costs and quality - Does the joint evaluation of costs and quality alter the ranking of Danish hospital departments?," COHERE Working Paper 2009:6, University of Southern Denmark, COHERE - Centre of Health Economics Research.
  • Handle: RePEc:hhs:sduhec:2009_006
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    References listed on IDEAS

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    Cited by:

    1. Nils Gutacker & Chris Bojke & Silvio Daidone & Nancy J. Devlin & David Parkin & Andrew Street, 2013. "Truly Inefficient Or Providing Better Quality Of Care? Analysing The Relationship Between Risk‐Adjusted Hospital Costs And Patients' Health Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 22(8), pages 931-947, August.
    2. Lukas Kwietniewski & Mareike Heimeshoff & Jonas Schreyögg, 2017. "Estimation of a physician practice cost function," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(4), pages 481-494, May.
    3. Häkkinen, Unto & Rosenqvist, Gunnar & Peltola, Mikko & Kapiainen, Satu & Rättö, Hanna & Cots, Francesc & Geissler, Alexander & Or, Zeynep & Serdén, Lisbeth & Sund, Reijo, 2014. "Quality, cost, and their trade-off in treating AMI and stroke patients in European hospitals," Health Policy, Elsevier, vol. 117(1), pages 15-27.
    4. Oxholm, Anne Sophie, 2016. "Physician Response to Target-Based Performance Payment," COHERE Working Paper 2016:9, University of Southern Denmark, COHERE - Centre of Health Economics Research.

    More about this item

    Keywords

    Hospital costs; efficiency; quality; cost-effectiveness;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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