Alternative Quality Measures and Profitability of Hospital Inpatient Services Offered

Abstract

In this analysis, we study the relationship between hospital quality and hospital profits for a sample of 88 Alabama (USA) hospitals. Quality is measured by three groups of procedures performed on newly admitted patients as suggested by the Center for Medicare and Medicaid Services and the Health Quality Alliance (HQA) as well as a weighted quality measure. Profit is measured for eight hospital services. Profits from cardiac care were most responsive to the quality measures studied. Moreover, profits from six of the inpatient services increased as the weighted quality measure increased. Finally, in two cases quality increased with the relative number of employees a hospital utilized.

KEYWORDS:

• quality
• patients
• hospitals
• performance
• profits

This research is partially funded by a grant from the Auburn University Montgomery Research Grant-in-Aid Program. An earlier version of this research was presented at the 2009 World Marketing Congress in Oslo Norway.