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The Association Between Hospital Margins, Quality of Care, and Closure or Other Change in Operating Status

  • Dan P. LyEmail author
  • Ashish K. Jha
  • Arnold M. Epstein
Original Research

Abstract

BACKGROUND

Hospitals face increased pressure to improve their quality of care in an environment of dwindling hospital payments. It is unclear whether lower hospital margins are associated with worse quality of care or closure.

OBJECTIVE

To determine the association of hospital margins with quality of care and changes in operating status.

DESIGN, SUBJECTS, AND MAIN MEASURES

We conducted an observational cross-sectional study analyzing hospitals’ margin, quality of care (process quality, risk-adjusted readmission rates, and risk-adjusted mortality rates), and changes in operating status (rates of closure, merger and acquisition, and conversion to a critical access hospital) for 3,262 non-public U.S. hospitals with data from the Hospital Quality Alliance and Medicare Cost Reports.

KEY RESULTS

Compared to those in the bottom 10% of operating margin, those in the top 10% had higher process quality (e.g. 95.3 vs. 93.7, p = 0.002 for acute myocardial infarction [AMI]) and lower readmission rates (e.g. 19.7% vs. 22.4%, p < 0.001 for AMI). We found no association between margins and mortality rates. Hospitals in the bottom 10% were more likely than those in the top 10% to close (5.7% vs. 2.0%), merge or become acquired (4.0% vs. 0.3%), or convert to a Critical Access Hospital (5.4% vs. 0.6%). Over 15% of hospitals in the lowest decile of hospital margin changed operating status in the subsequent year.

CONCLUSIONS

Low hospital margins are associated with worse processes of care and readmission rates and with changes in operating status. We should monitor low-margin hospitals closely for declining quality of care.

KEY WORDS

margins quality closure 

Notes

Acknowledgments

We would like to acknowledge George H. Pink for his help with calculating the hospital margins.

Funding

None disclosed.

Conflicts of Interest

None disclosed.

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Copyright information

© Society of General Internal Medicine 2011

Authors and Affiliations

  • Dan P. Ly
    • 1
    Email author
  • Ashish K. Jha
    • 2
    • 3
  • Arnold M. Epstein
    • 3
    • 4
  1. 1.Weill Cornell Medical CollegeNew YorkUSA
  2. 2.VA Boston Healthcare SystemBostonUSA
  3. 3.Department of Health Policy and ManagementHarvard School of Public HealthBostonUSA
  4. 4.Division of General Medicine, Brigham and Women’s HospitalBostonUSA

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