The Price-Quality Paradox in Health Care

We calculated the correlation between the state-level quality measures and prices to address the question “is higher quality associated with higher prices?” The correlation coefficients are presented in Table 1. A positive correlation implies higher quality measures occur where prices are higher. A negative correlation implies the quality measures are relatively lower where prices are higher and higher quality occurs where there are lower prices. Furthermore, the magnitude of the correlation coefficient suggests how strong the relationship is between price and quality. A correlation of 1.00 implies for every unit increase in price, quality increases proportionally (a –1.00 correlation implies price and quality move in opposite directions). On the other hand, a correlation coefficient of 0.00 implies there is no consistent relationship between the two measures.