Payer mix & financial health drive hospital quality: Implications for value-based reimbursement policies

by Matthew Manary, Richard Staelin, William Boulding, & Seth W. Glickman
February 16, 2017

Supplemental Material

Author Note

This work was supported by research funds from the Fuqua School of Business. The authors thank Dr. Harlan Krumholz and Yale University’s Center for Outcomes Research & Evaluation for their support and for providing the team with access to annual hospital-level outcomes data.

Author Affiliation

Manary, Staelin, Boulding, Duke University Fuqua School of Business; Glickman, University of North Carolina School of Medicine. Corresponding author’s e-mail: [email protected]


1.Dozier, K. C., Miranda, M. A., Kwan, R. O., Cureton, E. L., Sadjadi, J., & Victorino, G. P. (2010). Insurance coverage is associated with mortality after gunshot trauma. Journal of the American College of Surgeons, 210, 280–285.

2.Neureuther, S. J., Nagpal, K., Greenbaum, A., Cosgrove, J. M., & Farkas, D. T. (2013). The effect of insurance status on outcomes after laparoscopic cholecystectomy. Surgical Endoscopy and Other Interventional Techniques, 27, 1761–1765.

3.Taghavi, S., Jayarajan, S. N., Duran, J. M., Gaughan, J. P., Pathak, A., Santora, T. A., . . . Goldberg, A. J. (2012). Does payer status matter in predicting penetrating trauma outcomes? Surgery, 152, 227–231.

4.Dranove, D., & White, W. D. (1998). Medicaid-dependent hospitals and their patients: How have they fared? Health Services Research, 33, 163–185.

5.Centers for Medicare & Medicaid Services. (2008). Roadmap for implementing value driven healthcare in the traditional Medicare fee-for-service program. Retrieved from

6.Conrad, D. A., & Perry, L. (2009). Quality-based financial incentives in health care: Can we improve quality by paying for it? Annual Review of Public Health, 30, 357–371.

7.Donabedian, A. (1978, May 26). Quality of medical care. Science, 200, 856–864.

8.Mead, H., Cartwright-Smith, L., Jones, K., Ramos, C., Woods, K., & Siegel, B. (2008). Racial and ethnic disparities in U.S. health care: A chartbook (Commonwealth Fund Pub. No. 1111). Retrieved from Commonwealth Fund website:

9.Bazzoli, G. J., Chen, H. F., Zhao, M., & Lindrooth, R. C. (2008). Hospital financial condition and the quality of patient care. Health Economics, 17, 977–995.

10. Centers for Medicare & Medicaid Services. (2008). Mode and Patient-Mix Adjustment of the CAHPS Hospital Survey (HCAHPS). Retrieved from,%202008.pdf

11. Boulding, W., & Staelin, R. (1995). Identifying generalizable effects of strategic actions on firm performance: The case of demand-side returns to R&D spending. Marketing Science, 14(3, Suppl.), G222–G236.

12. Foster, G. (1978). Financial statement analysis. Englewood Cliffs, NJ: Prentice Hall.

13. Boulding, W., Kalra, A., Staelin, R., & Zeithaml, V. A. (1993). A dynamic process model of service quality: From expectations to behavioral intentions. Journal of Marketing Research, 30, 7–27.

14. Boulding, W., Kalra, A., & Staelin, R. (1999). The quality double whammy. Marketing Science, 18, 463–484.

15. White, B. (1999). Measuring patient satisfaction: How to do it and why to bother. Family Practice Management, 6(1), 40–44.

16. Boulding, W., Glickman, S. W., Manary, M. P., Schulman, K. A., & Staelin, R. (2011). Relationship between patient satisfaction with inpatient care and hospital readmission within 30 days. American Journal of Managed Care, 17, 41–48.

17. Glickman, S. W., Boulding, W., Manary, M., Staelin, R., Roe, M. T., Wolosin, R. J., . . . Schulman, K. E. (2010). Patient satisfaction and its relationship with clinical quality and inpatient mortality in acute myocardial infarction. Circulation: Cardiovascular Quality and Outcomes, 3, 188–195.

18. Cleverley, W. O., & Harvey, R. K. (1992). Is there a link between hospital profit and quality? Healthcare Financial Management: Journal of the Healthcare Financial Management Association, 46(9), pp. 40, 42, 44–45.

19. Kuhn, E. M., Hartz, A. J., Gottlieb, M. S., & Rimm, A. A. (1991). The relationship of hospital characteristics and the results of peer review in six large states. Medical Care, 29, 1028–1038.

20. Levitt, S. W. (1994). Quality of care and investment in property, plant, and equipment in hospitals. Health Services Research, 28, 713–727.

21. Bazzoli, G. J., Clement, J. P., Lindrooth, R. C., Chen, H. F., Aydede, S. K., Braun, S. K., & Loeb, J. M. (2007). Hospital financial condition and operational decisions related to the quality of hospital care. Medical Care Research and Review, 64, 148–168.

22. Granger, C. W. J. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37, 424–438.

23. Fiscella, K., Franks, P., Gold, M. R., & Clancy, C. M. (2000). Inequality in quality: Addressing socioeconomic, racial, and ethnic disparities in health care. JAMA, 283, 2579–2584.

24. Karve, A. M., Ou, F.S., Lytle, B. L., & Peterson, E. D. (2008). Potential unintended financial consequences of pay-for-performance on the quality of care for minority patients. American Heart Journal, 155, 571–576.

25. Medicare Program; Hospital Inpatient Value-Based Purchasing Program, 76 Fed. Reg. 26,490 (May 6, 2011) (to be codified at 42 C.F.R. pts. 422 and 480).

26. National Quality Forum. (2012). Measure evaluation criteria. Retrieved from

27. Gilman, M., Adams, E. K., Hockenberry, J. M., Wilson, I. B., Milstein, A. S., & Becker, E. B. (2014). California safety-net hospitals likely to be penalized by ACA value, readmission, and meaningful-use programs. Health Affairs, 33, 1314–1322.

28. Avalere Health & American Hospital Association. (2014). Trends affecting hospitals and health systems (TrendWatch Chartbook 2014). Retrieved from

29. Robinson, J. (2011). Hospitals respond to Medicare payment shortfalls by both shifting costs and cutting them, based on market concentration. Health Affairs, 30, 1265–1271.