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Does Hospital Investment in Quality Improvement Improve Quality? Evidence from a Panel Study of Florida Hospitals

For over a decade, and with renewed intensity since the passage of the Affordable Care Act, there has been heightened awareness and concern about the safety and quality of inpatient hospital care. In this paper, we estimate the impact of investment in quality improvement, as well as change in the policy environment, on patient safety (adverse) events in a 2004-2012 panel of hospitals in the state of Florida. We find hospital quality investment has favorable, but modest, effects on quality. On the other hand, policy change, which brings public attention to the issue, may have stronger effects. On average, we find a 10 percent increase in hospital quality investment leads to a 2 to 6 percent decrease in adverse events. In contrast, passage of the Patient Safety and Quality Improvement Act, in 2005, and the Centers for Medicare and Medicaid’s policy of withholding reimbursement, in 2008, had much larger effects (45 and 10 percent decreases in adverse events, respectively). Thus, reputation and professionalism may be more important than a “business case” for promoting health care quality. We also find evidence of spillover effects of quality investment from large research (“leading”) hospitals to less-resourced hospitals.