Does Hospital Investment in Patient Safety Improve Safety? Evidence from a Panel Study of Florida Hospitals

Does Hospital Investment in Patient Safety Improve Safety?

Evidence from a Panel Study of Florida Hospitals

For almost two decades, and with renewed intensity since the passage of the Affordable Care Act in 2010, the safety and quality of inpatient care in U.S. hospitals has been of national concern. Of particular interest to hospitals is how responsive is measured quality improvement in outcomes to investment in quality improvement. Indeed, the business case for safety and quality improvement is based on the proposition that given proper financial incentives (via more informed and selective purchasers), health care providers will naturally improve safety and quality by making the appropriate investments. But key to this proposition is that investments in quality improvement are cost effective.

In this paper, we take a new and extensive look at the business case for hospital safety while, to the extent possible, avoiding some of the analytical pitfalls of earlier work such as endogenous explanatory variables and simultaneity. We use a unique panel of all general hospitals in the state of Florida between 2004 and 2015 obtained from Florida’s Center for Health Information and Policy Analysis, a department of the state’s Agency for Health Care Administration. These data include annual hospital inpatient discharge information and financial data. We estimate the effect of quality investments on patient safety measured by a composite of Agency for Healthcare Research and Quality patient safety (adverse) events. Specifically, we estimate the elasticity of patient safety with respect to several measures of quality investment using quantile regression analysis, hospital fixed effects and dynamic-panel models to address endogeneity.

We find that rates of adverse events are quite inelastic with respect to hospital investment. Although we find that some kinds of hospital investment have favorable effects on safety, these effects are very small, with estimated elasticities of less than 0.1. In addition, we find evidence that policies, particularly the 2008 Centers for Medicare and Medicaid Services reimbursement-withholding policy, have stronger, but still relatively small, effects. Thus, there is little evidence to support the widely asserted “business case” for hospital investment in safety and quality.