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Comparing High- and Low-Performing Hospitals Using Risk-Adjusted Excess Mortality and Cost Inefficiency

Abstract: This study examines characteristics associated with high- and low-performing hospitals, where performance is defined in terms of both mortality outcomes and efficiency. In particular, we use data for Florida hospitals in 1999-2001 to classify hospitals into performance groups based on both risk-adjusted excess mortality and cost efficiency. The results indicate that hospitals in the high-performing group were more likely to be for-profit, had higher occupancy rates, had proportionately more Medicare and proportionately fewer Medicaid and self-pay patients, used fewer patient-care personnel per admission, and had higher operating margins than all other hospitals. Hospitals in the low-performing group, on the other hand, were less likely to be for-profit, had more beds, used more patient-care personnel per admission, had lower pay per patient-care personnel, had higher average costs, and had lower operating margins than all other hospitals. Interestingly, managed care presence, measured by proportion of HMO-PPO admissions, was not a significant factor in differentiating hospital performance groups.