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  5. Validating Hospital Quality Indicators and the Causal Effect of Hospital Closures

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Validating Hospital Quality Indicators and the Causal Effect of Hospital Closures

  • Amitabh Chandra
  • Maurice Dalton
  • Douglas O. Staiger
American Economic Review (Forthcoming)

Abstract

We evaluate the validity of commonly used hospital quality indicators using hospital closures that reallocate large numbers of patients to hospitals of different quality. Using over 20 years of Medicare claims for over 30 million patients admitted with five common diagnoses, we find that hospital quality indicators overstate the causal impact of hospitals on mortality and readmission rates by less than 10% but overstate hospital impacts on inpatient cost and length of stay by closer to 40%. On average, hospital closures reduce patient mortality by shifting patients to higher quality hospitals, but the effect varies widely.

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