TRULY INEFFICIENT OR PROVIDING BETTER QUALITY OF CARE? ANALYSING THE RELATIONSHIP BETWEEN RISK-ADJUSTED HOSPITAL COSTS AND PATIENTS' HEALTH OUTCOMES

• Published in: Health economics 2013-08, Vol.22 (8), p.931-947
• Main Authors: Gutacker, Nils, Bojke, Chris, Daidone, Silvio, Devlin, Nancy J., Parkin, David, Street, Andrew
• Format: Article
• Language: English
• Subjects: Aged; Arthroplasty, Replacement, Hip - economics; Arthroplasty, Replacement, Knee - economics; Clinical outcomes; Cost analysis; Cost estimates; cost-quality relationship; efficiency; Female; Health care expenditures; Health costs; Health economics; Health gain; Health status; Hernia, Inguinal - surgery; Hospital costs; Hospital Costs - statistics & numerical data; Hospitals - standards; Humans; Knee replacement; Male; Middle Aged; Models, Statistical; Patient Outcome Assessment; patient-reported outcomes (PRO); Quality of care; Quality of Health Care - economics; Quality of Health Care - statistics & numerical data; Risk adjustment; Risk Adjustment - economics; Risk Adjustment - statistics & numerical data; Studies; Surgery; Varicose Veins - surgery
• ISSN: 1057-9230; 1099-1050
• DOI: 10.1002/hec.2871

ABSTRACT Observed variation in hospital costs may be attributable to differences in patients' health outcomes. Previous studies have resorted to inherently incomplete outcome measures such as mortality or re‐admission rates to assess this claim. This study makes use of a novel dataset of routinely collected patient‐reported outcome measures (PROMs) linked to inpatient records to (i) access the degree to which cost variation is associated with variation in patients' health gain and (ii) explore how far judgement about hospital cost performance changes when health outcomes are accounted for. We use multilevel modelling to address the clustering of patients in providers and isolate unexplained cost variation. We find some evidence of a U‐shaped relationship between risk‐adjusted costs and outcomes for hip replacement surgery. For three other procedures (knee replacement, varicose vein and groin hernia surgery), the estimated relationship is sensitive to the choice of PROM instrument. We do not observe substantial changes in cost performance estimates when outcomes are explicitly accounted for. Copyright © 2012 John Wiley & Sons, Ltd.