Health Economics Papers
COHERE - Centre of Health Economics Research, University of Southern Denmark
Exploring the relationship between costs and quality - Does the joint evaluation of costs and quality alter the ranking of Danish hospital departments?
(), Jacob Nielsen Arendt
(), Dorte Gyrd-Hansen
() and Andrew Street
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.
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
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
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.
Keywords: Hospital costs; efficiency; quality; cost-effectiveness; (follow links to similar papers)
JEL-Codes: I11; (follow links to similar papers)
22 pages, June 25, 2010
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