Do Low Costs Lead to Low Quality?

The Commonwealth Fund has published the results of a study of Medicare beneficiaries admitted to U.S. hospitals with congestive heart failure or pneumonia. The study reports no definitive connection between the cost and quality of care, or between cost and death rates. The full report can be found here: CF Study.

This study may be important since many hospital officials and advocates believe there is a trade-off between lower costs and high quality. The CF summed up the report thusly:

“Understanding national patterns of quality and cost are a critical part of policymakers’ efforts to improve the value obtained from health care dollars. In this study, researchers found limited evidence to support the “penny-wise and pound-foolish” hypothesis: that low-cost hospitals discharge patients earlier but have higher readmission rates and greater downstream inpatient costs. Compared with higher-cost hospitals, lower-cost hospitals had only slightly higher readmission rates for CHF but did not generate higher costs for either CHF or pneumonia. The authors suggest that future work might examine whether some of the variation in costs between hospitals may be related to structural differences, including type of governance, extent of health information technology adoption, and degree of vertical integration with outpatient practices.”

While just two conditions, the study does argue that hospitals can help themselves by controlling costs, reducing lengths of stay and eliminating unnecessary diagnostic tests.

Better start now, before the reimbursement cuts hit the top line.


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