Effects of State Prospective Reimbursement Programs on Hospital Mortality

Prospective reimbursement (PR) programs were implemented in a number of states in the 1970s to reduce the rate of inflation in hospital costs. The associated savings have prompted concern about whether hospital administrators have been able to economize in ways that do not compromise patient care. This study examined the effects of PR on hospital mortality in 15 states. A quasi-experimental design was used to compare the 10-year trend in standardized mortality rates in hospitals in these states with those in a national sample of hospitals not receiving PR. Although the introduction of PR was associated with higher mortality on all patient groups studied, there was no indication that the level of cost saving in states under PR was correlated with patterns of mortality rates. We conclude that policymakers must be concerned that PR may be compromising the quality of patient care in hospitals, and that more definitive research is needed to improve understanding of the implied trade-off between cost containment and patient outcomes.