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Do prices affect the quality of care in the hospital setting?

This study aims to provide an overview of the existing evidence regarding how price affects the quality of care in the hospital setting. We find that the relationship between cost/price and the quality of care seems to depend on the condition and specific resource utilization. This project has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie Grant Agreement No 721402.


Limited empirical evidence exists regarding the effect of price/price changes on hospital quality of care. Drawing upon evidence suggesting that a link exists between cost and quality appears to be fruitful because DRG prices in most countries are based on hospital cost information such that costs and prices are closely related. This study aims to provide an overview of the existing evidence regarding how price affects the quality of care in the hospital setting. Therefore, we conduct a literature review of studies analyzing the association between price and the quality of care in hospitals. To date, only one systematic review performed by Hussey et al. (2013) has analyzed the association between cost and the quality of care; however, some questions remain unanswered. First, their review only focuses on the association between cost measures and the quality of care; these authors do not consider price/reimbursement. Therefore, an overview of the price-quality relationship is lacking. Second, these authors exclude studies involving non-US data sources. Therefore, an overview of cross-country comparisons is lacking. Finally, an overview of whether the results differ depending on the clinical condition is lacking. This study addresses these gaps in the literature and considers studies published since 2012, substantially increasing the quantity of evidence. Searches for literature related to the effect of hospital cost and price on the quality of care, including studies published between 1990 and March 2019, were carried out using four electronic databases, namely, PubMed, Scopus, EconLit, and ScienceDirect. On the basis of the inclusion and exclusion criteria, 22 articles were included through the systematic search. In addition, 21 studies included by Hussey et al. and four initial studies investigating the ‘price-quality’ relationship were added to our final review (i.e. a total of 47 studies). The extracted data included the articles’ title, author, year of the study, the country in which the study was conducted, samples and years of data collection, study design, clinical condition(s) investigated, types of quality measures, types of cost/price measures, methodological approach, and the direction of the association/causality between hospital cost/price and the quality of care. The quality of care was assessed using different outcome and process indicators. The outcome indicators comprised the following five main categories: mortality, readmission, complication, composite measures, and quality of life indexes. The primary study outcome of interest was the direction and statistical significance of the reported association between the hospital cost/price and the quality of care. We evaluated the direction of the association by indicating whether the association was (significantly linear/nonlinear) positive, (significantly linear) negative, (significantly) U-shaped/inverted U-shaped, or not significant. We find highly mixed evidence of the association. Overall, 74 (33%) associations between the unit cost/price and the unit quality were significantly positive, 33 (15%) associations were significantly negative, 11 (5%) associations were significantly U-shaped/inverted-U-shaped, and 105 (47%) associations were not significant. One potential explanation is the multiple ways that price and cost can relate to the quality of care. Another explanation might be the high heterogeneity across the included studies. Most notably, the overall pattern of the relationships between hospitals’ price-quality and cost-quality were quite similar. Indeed, some variations can be explained by the studies’ characteristics. In particular, we find that the proportion of studies that detected a significantly positive association is higher when a) price/reimbursement is used; b) process measures are used; c) the focus is on AMI, CHF, and stroke patients; and d) the methodological approach used to address confounding is more sophisticated.


health, cost/price, quality of care