The Effect of Hospital Financial Characteristics on Quality of Care

Abstract

OBJECTIVE: To assess the relationship among hospital financial characteristics, patient payer mix, and the incidence of negligent medical injuries. DESIGN: Retrospective medical record review linked to hospital financial reports. SETTING: Acute care hospitals in New York State in 1984. POPULATION: Stratified, random sample of 30,195 medical records from 51 acute care hospitals. MAIN OUTCOME MEASURES: Hospital rates of medical injury and substandard care were developed from reviews of 30,195 medical records at 51 acute care hospitals in New York in 1984. Hospital-level variables representing financial status, hospital staffing, and the proportion of self-pay and Medicaid hospital discharges were compiled from a variety of secondary sources. RESULTS: The likelihood of negligent medical injury was highest in those hospitals with the lowest inpatient operating costs per hospital discharge (odds ratio, 2.8; 95% confidence interval, 1.5 to 5.5). The effect of low inpatient operating costs was marked among hospitals in financial distress, many of which served indigent populations. CONCLUSIONS: Patients admitted to hospitals that are unable to expend sufficient resources on patient care may be at higher risk of substandard care. Further study of the effect of hospital financial status on quality of care appears to be warranted.

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