Doing well by doing good: Evaluating the influence of patient safety performance on hospital financial outcomes

Agency Staffing and Hospital Financial Performance: Insights and Implications

Introduction

Staffing is critical to hospital performance. However, in recent years, hospitals have struggled with severe staffing shortages, forcing them to rely on expensive agency staff to meet urgent patient care needs. This substitution of agency staff for permanent employees has raised concerns over its potential impact on financial stability. This study investigated the association of agency labor with hospital financial performance.

Methods

Utilizing tenets from agency theory and transaction cost theory, data for the calendar year 2022 for active short-term acute care hospitals (n=2771) in the United States were analyzed using multivariable linear regression analysis. Hospital financial performance was assessed using three variables: net patient revenue, operating revenue per bed, and operating expense per bed. The independent variable was agency labor cost, representing the total expenditure on agency labor. Additionally, organizational and market-level control variables that may independently affect hospital financial performance were included.

Results

Our regression findings indicated that agency labor cost was significantly associated with all three dependent variables: net patient revenue (β = 0.224, p < 0.001), operating revenue per bed (β = 0.042, p < 0.001), and operating expense per bed (β = 0.032, p < 0.001).

Discussion

The results indicated that increased agency labor was associated with higher revenues, but it also corresponded with increased expenses. Therefore, hospitals should strategically use agency staffing to meet immediate operational needs while remaining cognizant of its financial implications. The judicious use of agency labor can help hospitals balance the benefits of increased revenue against higher costs, while ensuring that they still meet immediate patient needs.

Patient-reported experience is associated with higher future revenue and lower costs of hospitals

BACKGROUND

Despite the established positive association between patient experience and patient volume, the relationship between patient experience and the financial performance of hospitals has not been studied thoroughly.

METHODS

To investigate this relationship, we used longitudinal data from 132 Swiss acute-care hospitals from 2016 to 2019 to examine the associations between patient experience and the proportion of elective patients, revenue, costs, and profits of hospitals. To account for a potential time lag effect, we utilized annual patient experience data and employed multilevel mixed-effects regression modeling to investigate its association with the aforementioned financial performance indicators for the following year.

RESULTS

Data for private and public hospitals were analyzed both separately and in combination, to account for the different proportions of elective patients in these types of hospitals. The resulting mixed models, revealed that for each year studied, the previous year's patient experience was positively associated with the current year's proportion of elective patients (β = 0.09, p = 0.004, all hospitals) and revenue (β = 1789.83, p = 0.037, private hospitals only), and negatively associated with costs (β =  - 1191.13, p = 0.017, all hospitals); but not significantly associated with future profits (β = 629.12, p = 0.240, all hospitals).

CONCLUSIONS

This analysis showed that better patient experience is associated with a higher proportion of elective patients, greater revenue, and lower costs. Our findings may assist hospital managers and regulators in identifying strategies to increase revenue and reduce costs.

When Agency Fails: An Analysis of the Association Between Hospital Agency Staffing and Quality Outcomes

Introduction

Staffing is critical to hospital quality, but recent years have seen hospitals grappling with severe shortages, forcing them to rely on contract or agency staff for urgent patient care needs. This shift in staffing mix has raised questions about its impact on quality. Consequently, this study investigated whether the increased use of agency staff has affected healthcare quality in hospitals. Given the limited recent research on this topic, practitioners remain uncertain about the effectiveness of their staffing strategies and their potential impact on quality.

Methods

Drawing from agency theory, data were obtained from Definitive Healthcare which consolidates information from numerous public access databases pertaining to hospitals such as the American Hospital Association Annual Survey (hospital profile) and the Hospital Value-Based Purchasing Program (quality data). We conducted a cross-sectional study using a multivariable linear regression model (2021-2022) with appropriate organizational and market- level control variables. Quality was measured across eight variables while the independent variable of interest was agency labor cost ratio operationalized as the percentage of net patient revenue consumed by agency labor expense.

Results

Our results suggested that the employment of agency staff was significantly and negatively associated with six of eight quality measures tested, including the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) star rating, Hospital Compare rating, the hospital Total Performance Score (TPS), and three of the four sub-domains that comprise the TPS: clinical domain score, person and community engagement domain score, and the efficiency and cost reduction score.

Discussion

Our results indicated that the increased use of agency labor may have a significant negative influence on quality outcomes at the hospital level. Our findings support the premise that interventions that promote full-time staffing may be more supportive of the quality of care delivered as well as patients' perceptions of care.

Extremes of Emergency Department Boarding are Associated With Poorer Financial Performance Among Hospitals

GOAL

Boarding emergency department (ED) patients is associated with reductions in quality of care, patient safety and experience, and ED operational efficiency. However, ED boarding is ultimately reflective of inefficiencies in hospital capacity management. The ability of a hospital to accommodate variability in patient flow presumably affects its financial performance, but this relationship is not well studied. We investigated the relationship between ED boarding and hospital financial performance measures. Our objective was to see if there was an association between key financial measures of business performance and limitations in patient progression efficiency, as evidenced by ED boarding.

METHODS

Cross-sectional ED operational data were collected from the Emergency Department Benchmarking Alliance, a voluntarily self-reporting operational database that includes 54% of EDs in the United States. Freestanding EDs, pediatric EDs and EDs with missing boarding data were excluded. The key operational outcome variable was boarding time. We reviewed the financial information of these nonprofit institutions by accessing their Internal Revenue Service Form 990. We examined standard measures of financial performance, including return on equity, total margin, total asset turnover, and equity multiplier (EM). We studied these associations using quantile regressions of added ED volume, ED admission percentage, urban versus nonurban ED site location, trauma status, and percentage of the population receiving Medicare and Medicaid as covariates in the regression models.

PRINCIPAL FINDINGS

Operational data were available for 892 EDs from 31 states. Of those, 127 reported a Form 990 in the year corresponding to the ED boarding measures. Median boarding time across EDs was 148 min (interquartile range [IQR]: 100-216). A significant relationship exists between boarding and the EM, along with a negative association with the hospital's total profit margin in the highest-performing hospitals (by profit margin percentage). After adjusting for the covariates in the regression model, we found that for every 10 min above 90 min of boarding, the mean EM for the top quartile increased from 245.8% to 249.5% (p < .001). In hospitals in the top 90th percentile of total margin, every 10 min beyond the median ED boarding interval led to a decrease in total margin of 0.24%.

PRACTICAL APPLICATIONS

Using the largest available national registry of ED operational data and concordant nonprofit financial reports, higher boarding among the highest-profitability hospitals (i.e., top 10%) is associated with a drag on profit margin, while hospitals with the highest boarding are associated with the highest leverage (i.e., indicated by the EM). These relationships suggest an association between a key ED indicator of hospital capacity management and overall institutional financial performance.

An Exploratory Analysis of the Association between Hospital Quality Measures and Financial Performance

Hospitals are perpetually challenged by concurrently improving the quality of healthcare and maintaining financial solvency. Both issues are among the top concerns for hospital executives across the United States, yet some have questioned if the efforts to enhance quality are financially sustainable. Thus, the aim of this study is to examine if efforts to improve quality in the hospital setting have a corresponding association with hospital profitability. Recent and directly relevant research on this topic is very limited, leaving practitioners uncertain about the wisdom of their investments in interventions which enhance quality and patient safety. We assessed if eight different quality measures were associated with our targeted measure of hospital profitability: the net patient revenue per adjusted discharge. Using multivariate regression, we found that improving quality was significantly associated with our targeted measure of hospital profitability: the net patient revenue per adjusted discharge. Significant findings were reported for seven of eight quality measures tested, including the HCAHPS Summary Star Rating (p < 0.001), Hospital Compare Overall Rating (p < 0.001), All-Cause Hospital-Wide Readmission Rate (p < 0.01), Total Performance Score (p < 0.001), Safety Domain Score (p < 0.01), Person and Community Engagement Domain Score (p < 0.001), and the Efficiency and Cost Reduction Score (p < 0.001). Failing to address quality and patient safety issues is costly for US hospitals. We believe our findings support the premise that increased attention to the quality of care delivered as well as patients' perceptions of care may allow hospitals to accentuate profitability and advance a hospital's financial position.

The Association Between Hospital Financial Performance and the Quality of Care - A Scoping Literature Review

BACKGROUND

Improving the quality of hospital care is an important policy objective. Hospitals operate under pressure to contain costs and might face challenges related to financial deficits. The objective of this paper was to identify and map the available evidence on the association between hospital financial performance (FP) and quality of care (Q).

METHODS

A scoping review was performed. Searches were conducted in 7 databases: Medline via PubMed, EMBASE, Web of Science, Scopus, EconLit, ABI/INFORM, and Business Source Complete. The search strategy combined multiple terms from 3 topics: hospital AND FP AND Q. The collected data were analysed using both quantitative and qualitative methods.

RESULTS

10 503 records were screened and 151 full text papers analysed. A total of 69 papers were included (60 empirical, 2 theoretical, 5 literature reviews, and 2 dissertations). The majority of identified studies were published within the last decade (2010-2021). Most empirical studies had been conducted in the United States (55/60), used cross-sectional approaches (32/60) and applied diverse regression models with FP measures as dependent variables, thus measuring the impact of Q on hospitals FP (34/60). The comparability of the studies' results is limited due to differences in applied methods and settings. Yet, the general overview shows that in almost half of the cases the association between hospital FP and Q was positive, while no study showed a clear negative association.

CONCLUSION

This scoping review provides an overview of the available literature on the association between hospital FP and Q. The results highlight numerous research gaps: (1) systematic reviews and meta-analyses of existing studies with similar measures of FP and Q are unavailable, (2) further methodological/conceptual work is needed on the metrics measuring hospital FP and Q, and (3) more empirical studies should analyse the association between FP and Q in non-US healthcare settings.

Association of women leaders in the C-suite with hospital performance

BACKGROUND

Women comprise 50% of the healthcare workforce, but only about 25% of senior leadership positions in the USA. No studies to our knowledge have investigated the performance of hospitals led by women versus those led by men to evaluate the potential explanation that the inequity reflects appropriate selection due to skill or performance differences.

METHODS

We conducted a descriptive analysis of the gender composition of hospital senior leadership (C-suite) teams and cross-sectional, regression-based analyses of the relationship between gender composition, hospital characteristics (eg, location, size, ownership), and financial, clinical, safety, patient experience and innovation performance metrics using 2018 data for US adult medical/surgical hospitals with >200 beds. C-suite positions examined included chief executive officer (CEO), chief financial officer (CFO) and chief operating officer (COO). Gender was obtained from hospital web pages and LinkedIn. Hospital characteristics and performance were obtained from American Hospital Directory, American Hospital Association Annual Hospital Survey, Healthcare Cost Report Information System and Hospital Consumer Assessment of Healthcare Providers and Systems surveys.

RESULTS

Of the 526 hospitals studied, 22% had a woman CEO, 26% a woman CFO and 36% a woman COO. While 55% had at least one woman in the C-suite, only 15.6% had more than one. Of the 1362 individuals who held one of the three C-suite positions, 378 were women (27%). Hospital performance on 27 of 28 measures (p>0.05) was similar between women and men-led hospitals. Hospitals with a woman CEO performed significantly better than men-led hospitals on one financial metric, days in accounts receivable (p=0.04).

CONCLUSION

Hospitals with women in the C-suite have comparable performance to those without, yet inequity in the gender distribution of leaders remains. Barriers to women's advancement should be recognised and efforts made to rectify this inequity, rather than underusing an equally skilled pool of potential women leaders.

Electronic surveillance of patient safety events using natural language processing

Objective

We describe our approach to surveillance of reportable safety events captured in hospital data including free-text clinical notes. We hypothesize that a) some patient safety events are documented only in the clinical notes and not in any other accessible source; and b) large-scale abstraction of event data from clinical notes is feasible.

Materials and Methods

We use regular expressions to generate a training data set for a machine learning model and apply this model to the full set of clinical notes and conduct further review to identify safety events of interest. We demonstrate this approach on peripheral intravenous (PIV) infiltrations and extravasations (PIVIEs).

Results

During Phase 1, we collected 21,362 clinical notes, of which 2342 were reviewed. We identified 125 PIV events, of which 44 cases (35%) were not captured by other patient safety systems. During Phase 2, we collected 60,735 clinical notes and identified 440 infiltrate events. Our classifier demonstrated accuracy above 90%.

Conclusion

Our method to identify safety events from the free text of clinical documentation offers a feasible and scalable approach to enhance existing patient safety systems. Expert reviewers, using a machine learning model, can conduct routine surveillance of patient safety events.

Association of Measured Quality and Future Financial Performance Among Hospitals Performing Cardiac Surgery

GOAL

For decades, hospitals performing cardiac surgery have carried the cost of implementing quality improvement activities and reporting quality outcomes. However, the financial return of such investments is unclear, which weakens the incentive for hospitals to invest in quality improvement activities. This study explored the relationship between a hospital's measured quality and its financial performance.

METHODS

Using data from the American Hospital Association and Hospital Compare from 2014 to 2018, we performed an observational study of hospitals performing cardiac surgery. We used mixed-effects regression models with fixed-year effects and random intercepts to explore associations between measured quality and hospital financial performance. Our dependent variables were margins (profit divided by revenue) and financial distress; our independent variables included Patient Safety Indicator 90 (PSI-90) and hospital characteristics.

PRINCIPAL FINDINGS

Our sample included 4,927 hospital-years from 1,209 unique hospitals. Hospitals in the worst-performing PSI-90 score quartile experienced a lower operating margin (-1.26%, 95% CI [-2.10 to -0.41], p = .004), a lower total margin (-0.92%, 95% CI [-1.66 to -0.17], p = .016), and an increased odds of financial distress in the next year (OR: 2.12, 95% CI [1.36-3.30], p = .001) when compared with the best-performing hospitals.

PRACTICAL APPLICATIONS

Our exploration into financial distress provides managers with a better understanding of the relationship between a hospital's measured quality and its financial position. In reflecting on our findings, hospital leaders may consider viewing patient safety as a modifiable factor that can improve their organization's overall financial health. Our findings suggest that excellent safety performance may be both financially and clinically beneficial to hospitals.

Testing Kissick's Iron Triangle-Structural Equation Modeling Analysis of a Practical Theory

Background/Purpose: The purpose of this research is to determine if the tradeoffs that Kissick proposed among cost containment, quality, and access remain as rigidly interconnected as originally conceived in the contemporary health care context. Although many have relied on the Kissick model to advocate for health policy decisions, to our knowledge the model has never been empirically tested. Some have called for policy makers to come to terms with the premise of the Kissick model tradeoffs, while others have questioned the model, given the proliferation of quality-enhancing initiatives, automation, and information technology in the health care industry. One wonders whether these evolutionary changes alter or disrupt the originality of the Kissick paradigms themselves. Methods: Structural equation modeling (SEM) was used to evaluate the Kissick hypothetical relationships among the unobserved constructs of cost, quality, and access in hospitals for the year 2018. Hospital data were obtained from Definitive Healthcare, a subscription site that contains Medicare data as well as non-Medicare data for networks, hospitals, and clinics (final n = 2766). Results: Reporting significant net effects as defined by our chosen study variables, we find that as quality increases, costs increase, as access increases, quality increases, and as access increases, costs increase. Policy and Practice Implications: Our findings lend continued relevance to a balanced approach to health care policy reform efforts. Simultaneously bending the health care cost curve, increasing access to care, and advancing quality of care is as challenging now as it was when the Kissick model was originally conceived.

Renovating Healthcare Facility Maintenance Planning: A Case Study From Walter Reed National Military Medical Center (WRNMMC)

PURPOSE

This article documents the development and implementation of a new approach for health facilities construction and maintenance planning, the use of a Facilities and Clinical Coordination (FCC) Council, at Walter Reed National Military Medical Center (WRNMMC).

BACKGROUND

WRNMMC is preparing for the largest and most complex renovation project in recent Department of Defense history. There is sparse documentation demonstrating stepwise frameworks for the implementation of effective and efficient health facilities maintenance management tools and techniques.

METHOD

This study discusses the development and evaluation of the FCC Council. Clarity to the literature sources guiding the development of the FCC Council is provided, followed by the survey approach undertaken to assess Council efficacy based on participants' perceptions. Data are analyzed using descriptive and inferential statistics.

RESULTS

Our study suggests routine cross-functional synchronous FCC Council meetings improve perceptions of safety and communication, encourage teamwork, and are more productive when conducted using synchronous rather than asynchronous communication. Clinician participants strongly supported the face-to-face meeting approach and considered such meetings more effective as they are perceived to maintain staff and patient safety as a constant organizational focus.

CONCLUSION

The FCC's perceived effectiveness toward improving healthcare facilities maintenance planning centers on engaged leadership, the inclusion of diverse subject matter experts, and structured group facilitation. Our results inform health facilities planners of the value the FCC Council brings to an organization by helping to develop organizational buy-in for major facilities renovation projects.

Association of Electronic Health Record Vendors With Hospital Financial and Quality Performance: Retrospective Data Analysis

Background

Electronic health records (EHRs) are a central feature of care delivery in acute care hospitals; however, the financial and quality outcomes associated with system performance remain unclear.

Objective

In this study, we aimed to evaluate the association between the top 3 EHR vendors and measures of hospital financial and quality performance.

Methods

This study evaluated 2667 hospitals with Cerner, Epic, or Meditech as their primary EHR and considered their performance with regard to net income, Hospital Value–Based Purchasing Total Performance Score (TPS), and the unweighted subdomains of efficiency and cost reduction; clinical care; patient- and caregiver-centered experience; and patient safety. We hypothesized that there would be a difference among the 3 vendors for each measure.

Results

None of the EHR systems were associated with a statistically significant financial relationship in our study. Epic was positively associated with TPS outcomes (R²=23.6%; β=.0159, SE 0.0079; P=.04) and higher patient perceptions of quality (R²=29.3%; β=.0292, SE 0.0099; P=.003) but was negatively associated with patient safety quality scores (R²=24.3%; β=−.0221, SE 0.0102; P=.03). Cerner and Epic were positively associated with improved efficiency (R²=31.9%; Cerner: β=.0330, SE 0.0135, P=.01; Epic: β=.0465, SE 0.0133, P<.001). Finally, all 3 vendors were associated with positive performance in the clinical care domain (Epic: β=.0388, SE 0.0122, P=.002; Cerner: β=.0283, SE 0.0124, P=.02; Meditech: β=.0273, SE 0.0123, P=.03) but with low explanatory power (R²=4.2%).

Conclusions

The results of this study provide evidence of a difference in clinical outcome performance among the top 3 EHR vendors and may serve as supportive evidence for health care leaders to target future capital investments to improve health care delivery.

The Scope of Hospital-Based Simulation

BACKGROUND

Healthcare simulation has expanded dramatically; however, little is known about the scope of simulation in acute care hospitals.

METHODS

A descriptive, cross-sectional online survey was used. Participants included nurse executives from acute care hospitals in California.

RESULTS

Most organizations (96%) used simulation primarily for education, 37% used simulation for health system integration and systems testing, 30% used it for error investigation, 15% used it for research, and 15% used it for patient/family education.

CONCLUSIONS

Organizations have a substantial opportunity to increase the scope of simulation beyond education to include systems integration, clinical systems testing, and other translational simulation activities. This targeted focus on patient safety and quality will allow hospitals to improve financial performance and maximize scarce resources.

Does Patient Safety Pay? Evaluating the Association Between Surgical Care Improvement Project Performance and Hospital Profitability

EXECUTIVE SUMMARY

Financial issues are top concerns for hospital executives. Evolving reimbursement structures focused on value provide an incentive to fully understand how patient safety performance and financial outcomes are connected. To that end, this study examines the relationships between Surgical Care Improvement Project (SCIP) measurements and hospital financial performance.Using multinomial logistic regression, we determined the association between hospital patient safety performances via analysis of eight prophylaxis data elements drawn from the archived Hospital Compare data. The measures are SCIP-Inf-1 (prophylactic antibiotic prophylaxis received within 1 hr prior to surgical incision), SCIP-Inf-2 (prophylactic antibiotic selection for surgical patients), SCIP-Inf-3 (prophylactic antibiotics discontinued within 24 hr after surgery end time), SCIP-Inf-4 (cardiac surgery patients with controlled 6 A.M. postoperative serum glucose management), SCIP-Inf-9 (urinary catheter removal postsurgery), SCIP-Inf-Card-2 (beta-blocker during the perioperative period), and SCIP-Inf-VTE-2 (venous thromboembolism prophylaxis). Data from the American Hospital Association provided two dimensions of organizational profitability: operating margin and net patient revenue. Our results indicate that improved hospital safety performance is associated with a relative risk of higher operating margin and net patient revenue, with some variation noted among the measures of patient safety. Our findings suggest that targeted improvement in patient safety performance, as evaluated in the Hospital Compare data, is associated with improved financial performance at the hospital level. Increased attention to safe care delivery may allow hospitals to generate additional patent care earnings, improve margins, and create capital to advance hospital financial position.

Overpriced? Are Hospital Prices Associated with the Quality of Care?

In most consumer markets, higher prices generally imply increased quality. For example, in the automobile, restaurant, hospitality, and airline industries, higher pricing generally conveys a signal of complexity and superiority of a service or product. However, in the healthcare industry, there is room to challenge the price-quality connection as both health prices and health quality can be difficult to interpret. In the best of circumstances, health care costs, prices, and quality can often be difficult to isolate and measure. Recent efforts by the Trump Administration and the Center for Medicare and Medicaid Services (CMS) have required the pricing of hospital services to be more transparent. Specifically, hospital chargemaster (retail) prices must now be available to the public. However, many continue to question if the pricing of health care services reflects the quality of service delivery. This research focuses on investigating the prices hospitals charge for their services in relation to the costs incurred and the association with the quality of care provided. By analyzing data from a nationwide sample of U.S. hospitals, this study considers the relationship between hospital pricing (as measured by the charge-to-cost ratio) and hospital quality performance as measured by the Value Based Purchasing Total Performance Score (TPS) and its associated sub-domains. Results of the study indicate that hospital prices, as measured by our primary independent variable of interest, the charge-to-cost ratio, are significantly and negatively associated with Total Performance Score, Patient Experience, and the Efficiency and Cost Reduction domains. A marginal statistically significant positive association is shown in the Clinical Care domain. The findings indicate that unlike most other industries, in medicine, higher pricing compared to cost does not necessarily associate with higher quality and, in fact, might indicate the opposite. The results of this study suggest that purchasers of healthcare, at all levels, have justification in challenging the pricing of healthcare services considering the quality scores available in the public domain.

How hospitals select their patient safety priorities: An exploratory study of four Veterans Health Administration hospitals

BACKGROUND

Hospitals face ongoing pressure to reduce patient safety events. However, given resource constraints, hospitals must prioritize their safety improvements. There is limited literature on how hospitals select their safety priorities.

PURPOSE

The aim of this research was to describe and compare the approaches used by Veterans Health Administration (VA) hospitals to select their safety priorities.

METHODOLOGY

Semistructured telephone interviews with key informants (n = 16) were used to collect data on safety priorities in four VA hospitals from May to December 2016. We conducted a directed content analysis of the interview notes using an organizational learning perspective. We coded for descriptive data on the approaches (e.g., set of cues, circumstances, and activities) used to select safety priorities, a priori organizational learning capabilities (learning processes, learning environment, and learning-oriented leadership), and emergent domains. For cross-site comparisons, we examined the coded data for patterns.

RESULTS

All hospitals used multiple approaches to select their safety priorities; these approaches used varied across hospitals. Although no single approach was reported as particularly influential, all hospitals used approaches that addressed system level or national requirements (i.e., externally required activities). Additional approaches used by hospitals (e.g., responding to staff concerns of patient safety issues, conducting a multidisciplinary team investigation) were less connected to externally required activities and demonstrated organizational learning capabilities in learning processes (e.g., performance monitoring), learning environment (e.g., staff's psychological safety), and learning-oriented leadership (e.g., establishing a nonpunitive culture).

PRACTICE IMPLICATIONS

Leaders should examine the approaches used to select safety priorities and the role of organizational learning in these selection approaches. Exclusively relying on approaches focused on externally required activities may fail to identify safety priorities that are locally relevant but not established as significant at the system or national levels. Organizational learning may promote hospitals' use of varied approaches to guide their selection of safety priorities and thereby benefit hospital safety improvement efforts.