Exploring the relationship between costs and quality: does the joint evaluation of costs and quality alter the ranking of Danish hospital departments?
OBJECTIVE
The purpose is to evaluate the relationship between costs and quality and to assess whether the joint evaluation of costs and quality affects the ranking of hospital departments relative to comparison based on costs alone.


METHODS
Using patient level data for 3,754 patients in six vascular departments, we estimate fixed effect models for costs (linear) and quality (logistic). We consider two quality measures; mortality and wound complications. To assess whether the joint evaluation of costs and quality affects the ranking of departments, we construct joint confidence regions for each pair of departmental effects for costs and quality using a bootstrap method and rank departments according to their cost-effectiveness ratio. The findings are used to evaluate a theory of a U-shaped cost/quality relationship.


RESULTS
The association between cost and quality differs depending on how quality is measured. Lower costs are associated with higher mortality, implying a cost/quality trade-off. In contrast, there is no clear association between costs and wound complications among vascular departments.


CONCLUSIONS
Compared to benchmarking of departments based solely on their costs, we show that the ranking of departments may be altered considerably when quality is taken into account. Consequently, it is important to have a well-rounded view of departmental objectives when undertaking performance evaluation. The results for mortality may lend some support to the theory of a U-shaped cost/quality relationship. However, the results for wound complications do not support the theory of a U-shaped cost/quality relationship.
Hvenegaard
Anne
A
Danish Institute for Health Services Research, 27-29 Dampfaergevej, 2100 Copenhagen, Denmark. ah@dsi.dk
Arendt
Jacob Nielsen
JN
Street
Andrew
A
Gyrd-Hansen
Dorte
D
D003362:Cost-Benefit Analysis; D003695:Delivery of Health Care / Q000592:standards*; D003718:Denmark; D017598:Efficiency, Organizational; D017721:Hospital Costs; D006748:Hospital Departments / Q000191:economics / Q000592:standards*; D006801:Humans; D017059:Models, Econometric; D011787:Quality of Health Care; D020379:Risk Adjustment