Skip to main content
Key Specialties
Cardiology Diabetology Endocrinology Gastroenterology Geriatrics and Gerontology Gynecology and Obstetrics Hematology Infectious Disease Internal Medicine Nephrology Neurology Oncology Pediatrics Respiratory Medicine Rheumatology Surgery
Congress Coverage
2024 ACC Congress 2023 ESMO Congress 2023 EASD Congress 2023 ERS Congress 2023 ESC Congress
Clinical Collections
Advances in Alzheimer’s

Keynote webinar | Spotlight on medication adherence

LIVE: Thursday 27th June 2024, 18:00-19:30 (CEST)
Join our expert panel to discover why you need to understand the drivers of non-adherence in your patients, and how you can optimize medication adherence in your clinics to drastically improve patient outcomes.
ADVANCED SEARCH
Log in
Top
BMC Health Services Research
Published in: BMC Health Services Research 1/2015

Open Access 01-12-2015 | Research article

Performing well in financial management and quality of care: evidence from hospital process measures for treatment of cardiovascular disease

Author: Gang Nathan Dong

Published in: BMC Health Services Research | Issue 1/2015

Login to get access

Abstract

Background

Fiscal constraints faced by U.S. hospitals as a result of the recent economic downturn are leading to business practices that reduce costs and improve financial and operational efficiency in hospitals. There naturally arises the question of how this finance-driven management culture could affect the quality of care. This paper attempts to determine whether the process measures of treatment quality are correlated with hospital financial performance.

Methods

Panel study of hospital care quality and financial condition between 2005 and 2010 for cardiovascular disease treatment at acute care hospitals in the United States. Process measures for condition-specific treatment of heart attack and heart failure and hospital-level financial condition ratios were collected from the CMS databases of Hospital Compare and Cost Reports.

Results

There is a statistically significant relationship between hospital financial performance and quality of care. Hospital profitability, financial leverage, asset liquidity, operating efficiency, and costs appear to be important factors of health care quality. In general, public hospitals provide lower quality care than their nonprofit counterparts, and urban hospitals report better quality score than those located in rural areas. Specifically, the first-difference regression results indicate that the quality of treatment for cardiovascular patients rises in the year following an increase in hospital profitability, financial leverage, and labor costs.

Conclusions

The results suggest that, when a hospital made more profit, had the capacity to finance investment using debt, paid higher wages presumably to attract more skilled nurses, its quality of care would generally improve. While the pursuit of profit induces hospitals to enhance both quantity and quality of services they offer, the lack of financial strength may result in a lower standard of health care services, implying the importance of monitoring the quality of care among those hospitals with poor financial health.
Literature
1.
Abelson R. Heart procedure is Off the charts in an Ohio city. Ohio City: The New York Times; 2006. August 18th.
2.
Falk I. Medical care in the USA: 1932–1972. Problems, proposals and programs from the committee on the costs of medical care to the committee for national health insurance. Milbank Q. 1973;51:1–32.CrossRef
3.
4.
Blumenthal D. Effects of market reforms on doctors and their patients. Health Aff. 1996;15:170–84.CrossRef
5.
6.
Chalkley M, Malcomson J. Contracting for health services with unmonitored quality. Econ J. 1998;108:1093–110.CrossRef
7.
Suhrcke M, Stuckler D. Will the recession Be Bad for Our health? It Depends, Soc Sci Med. 2012;74:647–53.CrossRefPubMed
8.
Friel S, Marmot M. Action on the social determinants of health and health inequities goes global. Annu Rev Public Health. 2011;32:225–36.CrossRefPubMed
9.
10.
Goldberg A, Petasnick W. Managing in a downturn: How Do You manage in a global financial recession? J Healthc Manag. 2010;55:149–53.PubMed
11.
Lindrooth R, Bazzoli G, Clement J. The effect of reimbursement on the intensity of hospital services. South Econ J. 2007;73:575–87.
12.
Bazzoli G, Richard L, Romana H-W, Jack N. The balanced budget Act of 1997 and U.S. Hospital operations. Inquiry. 2004/2005;41:401–17.
13.
Duffy S, Friedman B. Hospitals with chronic financial losses: what came next? Health Aff. 1993;12:151–63.CrossRef
14.
Kim C, Spahlinger D, Kin J, Billi J. Lean health care: what can hospitals learn from a world-class automaker? J Hosp Med. 2006;1:191–9.CrossRefPubMed
15.
Bazzoli G, Clement J, Lindrooth R, Chen H-F, Aydede S, Braun B, et al. Hospital financial condition and operational decisions related to the quality of hospital care. Med Care Res Rev. 2007;64:148–68.CrossRefPubMed
16.
Langa K, Sussman E. The effect of cost-containment policies on rates of coronary revascularization in California. N Engl J Med. 1993;329:1784–9.CrossRefPubMed
17.
Bazzoli G, Andes S. Consequences of hospital financial distress. Hospital and Health Serv Adm. 1995;40:472–95.
18.
Ramamonjiarivelo Z, Weech-Maldonado R, Hearld L, Menachemi N, Epane J, O’Connor S. Public Hospitals in Financial Distress: Is Privatization a Strategic Choice? Health Care Manag Rev. 2014. In press. (doi:10.1097/HMR.0000000000000032)
19.
20.
Dranove D, White W. Medicaid-dependent hospitals and their patients: How have they fared? Health Serv Res. 1998;33:163–86.PubMedPubMedCentral
21.
Newhouse J. Toward a theory of nonprofit institutions: an economic model of a hospital. Am Econ Rev. 1970;60:64–74.
22.
Wedig G, Sloan F, Hassan M, Morrisey M. Capital structure, ownership, and capital payment policy: the case of hospitals. J Financ. 1988;43:21–40.CrossRef
23.
Valvona J, Sloan F. Hospital profitability and capital structure: a comparative analysis. Health Serv Res. 1988;23:343–57.PubMedPubMedCentral
24.
Shleifer A, Vishny R. Liquidation values and debt capacity: a market equilibrium approach. J Financ. 1992;47:1343–66.CrossRef
25.
Sloan F. Not-for-profit ownership and hospital behavior. In: Anthony C, Joseph N, editors. Handbook of health economics. 2000. p. 1141–74. 1B.
26.
Sloan F, Steinwald B. Effects of regulation on hospital costs and input Use. J Law Econ. 1980;23:81–109.CrossRefPubMed
27.
Banks D, Paterson M, Wendel J. Uncompensated hospital care: charitable mission or profitable business decision? Health Econ. 1997;6:133–43.CrossRefPubMed
28.
Blegen M, Vaughn T, Goode C. Nurse experience and education: effect on quality of care. J Nurs Adm. 2001;31:33–9.CrossRefPubMed
29.
Needleman J, Buerhaus P, Mattke S, Stewart M, Zelevinsky K. Nurse-staffing levels and the quality of care in hospitals. N Engl J Med. 2002;346:1715–22.CrossRefPubMed
30.
Feldstein M. The Rising Cost of Hospital Care, Information Resources Press. 1971.
31.
Chiswick B. Book review: the rising cost of hospital care. Med Care. 1973;11:168–72.CrossRef
32.
33.
Picone G, Sloan F, Chou S-Y, Taylor D. Does higher hospital cost imply higher quality of care? Rev Econ Stat. 2003;85:51–62.CrossRef
34.
35.
Encinosa W, Bernard D. Hospital finances and patient safety outcomes. Inquiry. 2005;42:60–72.PubMed
36.
Volpp K, Buckley E. The effect of increases in HMO penetration and changes in payer Mix on in-hospital mortality and treatment patterns for acute myocardial infarction. Am J Manage Care. 2004;10:505–12.
37.
Bazzoli G, Chen H-F, Zhao M, Lindrooth R. Hospital financial condition and the quality of patient care. Health Econ. 2008;17:1099–50.CrossRef
38.
Weech-Maldonado R, Neff G, Mor V. Does quality of care lead to better financial performance?: the case of the nursing home industry. Health Care Manag Rev. 2003;28:201–16.CrossRef
39.
Weech-Maldonado R, Neff G, Mor V. The relationship between quality of care and financial performance in nursing homes. J Health Care Finance. 2003;29:48–60.PubMed
40.
Harkey J, Vraciu R. Quality of health care and financial performance, is there a link? Health Care Manag Rev. 1992;17:55–63.
41.
Gapenski, Louis. 2011, Healthcare Finance: An Introduction to Accounting and Financial Management, 5th Ed., Health Administration Press.
42.
Nowicki, Michael. 2007, The Financial Management of Hospitals and Healthcare Organizations, 4th ed., Health Administration Press.
43.
Lieberthal, Robert. Hospital Quality: A PRIDIT Approach, Health Services Research 43, 988–1005.
44.
Shwartz M, Ren J, Pekoz E, Wang X, Cohen A, Restuccia J. Estimating a composite measure of hospital quality from the hospital compare database. Med Care. 2008;46:778–85.CrossRefPubMed
45.
Magnus S, Smith D. Better Medicare cost report data are needed to help hospitals benchmark costs and performance. Health Care Manag Rev. 2000;25:65–76.CrossRef
46.
Schrag D, Bach P, Dahlman C, Warren J. Identifying and measuring hospital characteristics using the SEER-Medicare data and other claims-based sources. Med Care. 2002;40:IV96–IV103.CrossRef
47.
Coyne J, Richards M, Short R, Shultz K, Singh S. Hospital cost and efficiency: Do hospital size and ownership type really matter? J Healthc Manag. 2009;54:163–74.PubMed
48.
McCue M. The Use of cash flow to analyze financial distress in California hospitals. Hospital and Health Serv Adm. 1991;36:223–41.
49.
Yan W, Denison D, Butler JS. Revenue structure and nonprofit borrowing. Public Finance Rev. 2009;37:47–67.CrossRef
50.
Kim TH, McCue M. Association of market, operational, and financial factors with nonprofit Hospitals’ capital investment. Inquiry. 2008;45:215–31.PubMed
51.
Vitaliano D, Toren M. Cost and efficiency in nursing homes: a stochastic frontier approach. J Health Econ. 1994;13:281–300.CrossRefPubMed
52.
Brown M, Sturman M, Simmering M. Compensation policy and organizational performance: the efficiency, operational, and financial implications of Pay levels and Pay structure. Acad Manag J. 2003;46:752–62.CrossRef
53.
Fisher M, Krishnan J, Netessine S. Retail store execution: an empirical study. University of Pennsylvania: Working Paper; 2006.
54.
Mann J, Melnick G, Bamezai A, Zwanziger J. Uncompensated care: hospitals’ responses to fiscal pressures. Health Affairs. 1995;14:263–70.CrossRefPubMed
55.
Eggleston K, Shen Y-C, Lau J, Schmid C, Chan J. Hospital ownership and quality of care: what explains the different results in the literature? Health Econ. 2008;17:1345–62.CrossRefPubMed
56.
Kessler D, McClellan M. The effects of hospital ownership on medical productivity. Rand J Econ. 2002;33:488–506.CrossRefPubMed
57.
Baldwin L-M, MacLehose R, Hart G, Beaver S, Every N, Chan L. Quality of care for acute myocardial infarction in rural and urban US hospitals. J Rural Health. 2004;20:99–108.CrossRefPubMed
58.
Greene, William. 2011, Econometric Analysis, 7th ed., Prentice Hall.
59.
Granger C, Newbold P. Spurious Regressions in Econometrics. J Econometrics. 1974;2:111–20.CrossRef
60.
61.
Horwitz J. Making profits and providing care: comparing nonprofit, for-profit, and government hospitals. Health Aff. 2005;24:790–801.CrossRef
62.
Kuhn E, Hartz A, Gottlieb M, Rimm A. The relationship of hospital characteristics and the results of peer review in Six large states. Med Care. 1991;29:1028–38.CrossRefPubMed
63.
64.
Werner R, Bradlow E. Relationship between Medicare’s hospital compare performance measures and mortality rates. J Am Med Assoc. 2006;296:2694–702.CrossRef
Metadata
Title
Performing well in financial management and quality of care: evidence from hospital process measures for treatment of cardiovascular disease
Author
Gang Nathan Dong
Publication date
01-12-2015
Publisher
BioMed Central
Published in
BMC Health Services Research / Issue 1/2015
Electronic ISSN: 1472-6963
DOI
https://doi.org/10.1186/s12913-015-0690-x

Other articles of this Issue 1/2015

BMC Health Services Research 1/2015 Go to the issue

Research article

The use of electronic patient records for medical research: conflicts and contradictions

Research article

Patient outcomes vs. service workload: an analysis of outcomes in the burn service of England and Wales

Research article

Program manager perspectives on the service system to meet the needs of youth with concurrent disorders: findings from a Canadian national survey

Research article

Task shifting of HIV/AIDS case management to Community Health Service Centers in urban China: a qualitative policy analysis

Research article

Acute hospital-based services used by adults during the last year of life in New South Wales, Australia: a population-based retrospective cohort study

Research article

Health service utilization after terrorism: a longitudinal study of survivors of the 2011 Utøya attack in Norway