AIM: Low-cost hospitalspenny wise and pound foolish?

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A study of Medicare beneficiaries admitted to U.S. hospitals with congestive heart failure (CHF) showed no definitive connection between the cost and quality of care, or between cost and death rates. The research was published Feb. 22 in the Archives of Internal Medicine.

Hospitals face increasing pressure to lower costs while improving quality, according to the authors. “It is unclear if efforts to reduce hospital cost of care will adversely affect quality of care or increase downstream inpatient cost of care,” the authors wrote.

Lena M. Chen, MD, from the Ann Arbor Veterans Affairs Medical Center and the division of general medicine at the University of Michigan in Ann Arbor, Mich., and colleagues conducted an observational cross-sectional study of 3,000 U.S. non-federal hospitals discharging Medicare patients for CHF in 2006. They examined the association between hospital cost of care and the following variables: process quality of care, 30-day mortality rates, readmission rates and six-month inpatient cost of care.

Compared with hospitals in the lowest-cost quartile for CHF care, the researchers found that hospitals in the highest-cost quartile had higher quality-of-care scores (89.9 vs. 85.5 percent) and lower mortality for CHF (9.8 vs. 10.8 percent).

Also, low-cost hospitals had similar or slightly higher 30-day readmission rates compared with high-cost hospitals (24.7 vs. 22 percent for CHF). The authors also found that patients initially seen in low-cost hospitals incurred lower six-month inpatient cost of care compared with patients initially seen in hospitals with the highest cost of care ($12,715 vs. $18 411 for CHF).

The researchers discovered that hospital costs were stable over time. For instance, 63.6 percent of the hospitals in the highest-cost quartile for CHF in 2004 were still in the highest quartile in 2005, and 88.8 percent were in the two highest quartiles.

Chen and colleagues concluded that the associations are inconsistent between hospitals' cost of care and quality of care and between hospitals' cost of care and mortality rates. “Most evidence did not support the ‘penny wise and pound foolish’ hypothesis that low-cost hospitals discharge patients earlier but have higher readmission rates and greater downstream inpatient cost of care,” they wrote.

The Commonwealth Fund partly funded the trial.