Hospital Financial Condition and Operational Decisions Related to the Quality of Hospital Care

Abstract

Financial pressure mounted for hospitals nationwide during the late 1990s. Our study examines how this affected the quality of their operations in terms of organizational infrastructure and processes that support the delivery of care. Our sample consisted of community hospitals operating between 1995 and 2000. Financial pressure was measured based on changes in net patient revenues per adjusted patient day and the ratio of cash flow to total revenues. The authors examined effects on hospital investments in plant and equipment and on hospital standards compliance with selected Joint Commission on Accreditation of Healthcare Organization performance areas. The results suggest that increasing financial pressures did lead to cutbacks in these areas. These findings suggest the importance of looking broadly across hospital operations to identify factors that may contribute to poor patient outcomes. Given the findings of earlier studies, these results suggest that poor outcomes may in part result from deterioration in supporting infrastructure and organizational processes.