Quality improvement and hospital financial performance

The objective of this study was to examine the association between the scope and intensity of Quality improvement (QI) implementation in hospitals and organizational performance. A sample of 1,784 community hospitals was used to assess relationships between QI implementation approach and two hospital-level performance indicators: cash flow and cost per case. Two-stage instrumental variables estimation, in which predicted values (instruments) of eight QI intensity and scope variables plus control (exogenous) variables were used to estimate hospital-level performance indicators. Our results suggest that QI has a measurable impact on global measures of organizational performance and that both control and leaning approaches to QI matter in these settings. Hospitals that implement QI effectively can reasonably expect to improve their financial and cost performance, or at least not place the hospital at risk for investing in quality improvement. These outcomes are specific to QI strategies that emphasize both control and learning. Copyright # 2006 John Wiley & Sons, Ltd.