Hospital Financial Distress and Patient Outcome: A Panel Study

1. Hospital Financial Distress and Patient Outcome: A Panel Study Mei Zhao, MHA Virginia Commonwealth University Gloria J. Bazzoli, Ph.D. Virginia Commonwealth University Henry J. Carretta, MPH Virginia Commonwealth University Agency for Healthcare Research and Quality,Grant # R01 HS13094

2. Rationale for the Study • About 1/3 US hospitals have negative total margins • Medical mistakes result in the deaths of 44,000 to 98,000 hospitalized Americans a year (IOM, 1999) • Some Patient safety indicators are deteriorating • Respiratory failure ↑ 31% • Infection due to medical care ↑ 14% • Decubitus ulcer ↑ 19% • Septicemia ↑ 41% (Romano et al., 2003)

3. Research Questions • What differences exist in the quality of care and patient safety between financially distressed and non-distressed hospitals? • What differences exist in the structural and organizational characteristics between these two groups?

4. Method • Design • A panel study design is applied to data from 1995-2000 • Sampling • Nonfederal short term general hosps from 11 states (AZ, CA, CO, FL, IA, MD, MA, NJ, NY,WA, and WI), about 1,300 per year • Data collection • AHA, MCR, HCUP (SID) 1995-2000

5. Key Variables • Financial Distress • Average negative operating margin 93-95 • Patient Outcome • IQIs (5): AMI, CHF, Stroke, GI hemorrhage, and Pneumonia • PSIs (9): Complications of anesthesia, Death in low mortality DRGs, Decubitus ulcer, Failure to rescue, infections due to medical care, post-op hemorrhage, post-op PE, sepsis, and accidental puncture

6. Analytic Strategies • Descriptive statistics and cross-tabulations • Adjusted Least Square Means (ALSM) • Patient age, gender, acuity, and case-mix

7. Results: Comparison of Hospital Structure and Organizational Characteristics

8. Results • No significant difference between distressed and nondistressed hospitals • IQIs • AMI • PSIs • Complications of anesthesia • infections due to medical care • post-op PE • sepsis • accidental puncture

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13. Summary • Distressed hospitals are more likely to be • Publicly owned, major teaching, and larger proportion Medicaid patients • Distressed hospitals have smaller RN ratio • Better financial performance, better patient outcomes: CHF, Pneumonia, and Decubitus • The gap narrowed for the mortality indicators beginning in 1998: Stroke and Pneumonia

14. Significance to Policy and Future Research • Cost control policies may have had unintended negative effects on patient outcomes • Hospitals experiencing financial distress may have fewer resources to invest in the quality of their services • BBA may have had an immediate adverse effect on patient outcomes for both distressed and non-distressed hospitals • Examine how financial condition influences process and resource investments related to quality of care