Hospital Costs and Quality of Care: An Organizational Perspective

Based on survey data gathered from 388 government non-federal and voluntary general service hospitals, this study examines the impact of several dimensions of organizational structure on indicators of hospital efficiency and level of adoption of new medical technology. Attention is focused on the degree to which resource allocation decision making is centralized and levels of visibility of medical and economic consequences. The evidence presented suggests that, in terms of efficiency, organizational structure is an important factor in determining whether gains in effectiveness outweigh expenses associated with the adoption of new medical technology.