Studies evaluating the cost and quality of healthcare services have produced inconsistent results. We seek to determine if higher paid hospitals have higher quality outcomes compared to those receiving lower payments, after accounting for clinical and market level factors. Using inpatient commercial claims from the IBM® MarketScan® Research Databases, we used an ordinal logistic regression to analyze the association between hospital median payments for elective hip and knee procedures and 3 quality outcomes: prolonged length of stay, complication rate, and 30-day readmission rate. Patient-level and market factor covariates were appropriately adjusted. Hospital-level payments were found to be not significantly correlated with hospital quality of care. This research suggests that higher payments cannot predict higher quality outcomes. This finding has implications for provider-payer negotiations, value-based insurance designs, strategies to increase high-value care provision, and consumer choices in an increasingly consumer-oriented healthcare landscape.
Keywords: healthcare consumerism; healthcare cost and quality; hospital price variation; pay-for-performance; price transparency; value-based care.