Hospital Cost of Care, Quality of Care, and Readmission Rates: Penny-Wise and Pound-Foolish - The Commonwealth Fund

A study of Medicare beneficiaries admitted to U.S. hospitals with congestive heart failure or pneumonia showed no definitive connection between the cost and quality of care, or between cost and death rates.

The Issue

Hospitals face increasing pressure to lower the cost of health care while at the same time improving quality. Some experts are concerned about the trade-offs between the two goals, wondering whether hospitals with lower costs and lower expenditures might devote less effort to improving quality. Critics wonder if the drive to lower costs might create a "penny-wise and pound-foolish" approach, with hospitals discharging patients sooner, only to increase readmission rates and incur greater inpatient use—and costs—over time. To examine the relationships between quality and cost, researchers analyzed discharge, cost, and quality data for Medicare patients with congestive heart failure and pneumonia at more than 3,000 hospitals.
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