Involuntary Benchmarking and Quality Improvement: The Effect of Mandated Public Disclosure on Hospitals

Abstract

This paper documents the responses of Pennsylvania hospitals to the public dissemination by the Pennsylvania Health Care Cost Containment Council (PHC4) in 1990 of mandated hospital disclosures of financial and nonfinancial performance information. We find that PHC4's relative performance disclosures had an effect in that hospitals that performed poorly on patient quality of care, as measured by mortality outcomes, reacted by making significant improvements in this measure by 1992, although this was accompanied by lower reductions in length of stay. Further, we find that the improvements in mortality outcomes were more marked for DRGs in more competitive environments and for hospitals that ranked higher on financial condition in the year of disclosure. Additionally, the rationale for these costly quality improvements in the period following the disclosure appears to be related to market share, that is, poorly performing hospitals lost, whereas better performing hospitals gained in market share.

The interaction between cost‐management and learning for major surgical procedures – lessons from asymmetric information

“…If this unit cost is equal to marginal cost or if marginal cost should be even lower than unit cost, cost saving efforts will render the treatment of more patients at a better overall quality possible. This is clearly in line with the aims of health care reform in most countries, which seeks to increase quality and promote efficiency in the delivery of these services at the same time [52].…”

Practice Developments in Budgeting: An Overview and Research Perspective

“…Although the management accounting literature has just begun to produce research on activity-based budgeting (Selto and Widener 2001), there are several studies on the associated areas of activity-based cost management (ABCM) and capacity management. 15 Research on ABCM systems includes evidence on the types of activities used in specific industries (Banker and Johnston 1993;Anderson 1995b;Fisher and Ittner 1999;Evans et al 2001), inter-relationships among activities (Datar et al 1993), the degree of aggregation (Datar and Gupta 1994), and the validity of the classic activity-based cost hierarchy (Ittner et al 1997). However, few studies have moved beyond a product-costing focus, and little is known about how ABCM supports other organizational practices, such as planning and budgeting processes (Ittner and Larcker 2001).…”

“…17 There is evidence that RPE-data is used in several public sector settings, exploiting mandated public disclosures (e.g., Banker et al 1998;Dopuch and Gupta 1997;Evans et al 1997;Northcott and Llewellyn 2003). 18 Benchmarking is related to RPE and has witnessed some popularity in the management literature (e.g., Camp 1989), but considerably less in management accounting (Elnathan et al 1996).…”

Performance Evaluation of Hospitals’ Emergency Departments using a Modified American Productivity and Quality Center Approach

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