Patient Safety and Quality

Reduced payments to hospitals may jeopardize patient safety

Hospitals typically try to reduce costs when facing payment cutbacks by insurers such as Medicare and Medicaid. For example, they may shorten hospital stays or provide fewer diagnostic and treatment services for patients whose payers provide low reimbursement. These payment constraints may jeopardize patient safety, suggests a new study.

Researchers examined four risk adjusted patient safety indicators (PSIs) at large urban hospitals in 11 States: decubitus ulcer (pressure sores), infection resulting from medical care, postoperative hemorrhage or hematoma, and postoperative pulmonary embolism (PE) or deep vein thrombosis (DVT). These conditions may reflect poor quality of care and, as such, are indicators of threats to patient safety.

The researchers used models to examine changes in hospital PSI rates for various payers (Medicare, Medicaid, self-pay, and private insurance) during a time when both governmental and private payers implemented more stringent payment policies. The Medicare Balanced Budget Act (BBA) of 1997 cut payments to hospitals, and private payers transferred financial risk to providers via managed care contracts and selective contracting. States enrolled patients in managed care plans to limit Medicaid costs.

Hospital PSI rates for Medicare patients in the same hospital increased significantly (that is, quality of care worsened) during the study period. Private payer PSI rates increased significantly following the BBA for two PSIs, infection due to medical care and postoperative PE/DVT, and when the PSIs were pooled into a single model. The trend was less consistent for Medicaid and did not exist for self-pay hospital PSI rates, after controlling for organizational and market factors.

PSI rates for the two payers that experienced the largest declines in payment-to-cost ratios, Medicare and private payers, generally showed the worse performance. The findings were based on analysis of 1995-2000 data from the Agency for Healthcare Research and Quality (AHRQ) Healthcare Cost and Utilization Project State Inpatient Database. The study was supported by AHRQ (HS13094).

See "Does the patient's payer matter in hospital patient safety? A study of urban hospitals," by Jan P. Clement, Ph.D., Richard C. Lindrooth, Ph.D., Askar S. Chukmaitov, M.D., Ph.D., and Hsueh-Fen Chen, M.S., in the February 2007 Medical Care 45(2), pp. 131-138.

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