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Does Higher Hospital Cost Imply Higher Quality of Care?

Author

Listed:
  • Gabriel A. Picone

    (University of South Florida)

  • Frank A. Sloan

    (Duke University)

  • Shin-Yi Chou

    (National Bureau of Economic Research)

  • Donald H. Taylor

    (New Jersey Institute of Technology)

Abstract

This study investigates whether higher input use per stay in the hospital (treatment intensity) and longer length of stay improve outcomes of care. We allow for endogeneity of intensity and length of stay by estimating a quasi-maximum-likelihood discrete factor model, where the distribution of the unmeasured variable is modeled using a discrete distribution. Data on elderly persons come from several waves of the National Long-Term Care Survey merged with Medicare claims data for 1984-1995 and the National Death Index. We find that higher intensity improves patient survival and some dimensions of functional status among those who survive. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Gabriel A. Picone & Frank A. Sloan & Shin-Yi Chou & Donald H. Taylor, 2003. "Does Higher Hospital Cost Imply Higher Quality of Care?," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 51-62, February.
    • Handle: RePEc:tpr:restat:v:85:y:2003:i:1:p:51-62
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    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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