Quality Variation and its Impact on Costs and Satisfaction

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Abstract
Improving the quality of inpatient hospital care is increasingly attainable in a variety of settings. However, the relationship between rising quality and costs is unclear; similarly the relationship between varying levels of quality and a patient's satisfaction remains poorly defined. We use data from the Quality Improvement Demonstration Study (QIDS) based in 30 district hospitals in the Philippines. There were 974 children in the study; these children were cared for by 43 physicians. To measure quality of care, the physicians completed vignettes, a valid and inexpensive measure. Patient exit surveys were given to parents of children on the day of discharge, collecting information on services and hospital charges for the inpatient stay, payment sources for the hospitalization, and the Patient Satisfaction Survey (PSQ-18). We found a nonlinear relationship between quality and hospital charges: at low levels of quality improvements are linked to lower hospital charges. However, as quality improves further, these changes lead to higher charges. Higher quality also demonstrated a similar nonlinear relationship with patient satisfaction. The U-shaped association between quality and hospital charges suggests that targeting the lowest quality providers may decrease costs. The similar relationship between patient-reported satisfaction and quality improvement suggests that investments in quality will raise satisfaction, perhaps even when charges are increased.