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Patient Safety and Quality

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When financially vulnerable rural hospitals become critical access hospitals, patient safety improves in several areas

It has been difficult for many small rural hospitals to recover their Medicare costs under the prospective payment system (PPS) rates. In order to protect these financially vulnerable hospitals and improve their quality of care, in 1997 Medicare began to allow some of them to convert to critical access hospitals (CAH) and to be reimbursed based on cost rather than PPS rates. Rural Iowa hospitals that converted to CAH showed improved patient safety in several areas, according to a new study.

The study authors examined the effect of CAH conversion on patient safety by analyzing secondary data on hospital patient safety indicators (PSIs), hospital CAH status, patient case-mix, and market variables for 89 Iowa rural hospitals from 1997 to 2004. PSIs are conditions that signal a problem with patient safety, such as bed sores, infections due to medical care, accidental puncture or laceration, and foreign body left in the body during surgery.

CAH conversion in the Iowa rural hospitals studied was linked to better performance in areas of care-related pneumothorax, selected infections due to medical care, accidental puncture or laceration, and the composite score of four PSIs. However, CAH conversion had no significant impact on the observed rates of death in low-mortality diagnosis-related groups, foreign body left in a patient during surgery or other procedure, risk-adjusted rate of decubitus ulcer (bed sore), or composite score of six PSIs.

The authors speculate that the most likely mechanism linking CAH conversion and improved care quality is the change in payment mechanism from prospective to cost-based. Under PPS, the marginal costs associated with quality improvement are not reimbursed and the hospital has to bear all the cost incurred by increased care intensity and quality. Under cost-plus reimbursement, marginal costs associated with increased quality are fully reimbursed.

The study was supported by the Agency for Healthcare Research and Quality (HS15009).

See "Effect of critical access hospital conversion on patient safety," by Pengxiang Li, Ph.D., John E. Schneider, Ph.D., and Marcia M. Ward, Ph.D., in the December 2007 HSR: Health Services Research 42(6), pp. 2089-2108.

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