Are High-Cost Hospitals Better Hospitals?

(Photo: Patrick Mannion)

A new working paper (ungated here) by Joseph J. Doyle, Jr., John A. Graves, Jonathan Gruber, and Samuel Kleiner exploits the random assignment of ambulances to emergency care patients to determine whether higher-cost hospitals achieve better outcomes. From the abstract:

Ambulances are effectively randomly assigned to patients in the same area based on rotational dispatch mechanisms. Using Medicare data from 2002-2008, we show that ambulance company assignment importantly affects hospital choice for patients in the same zip code. Using data for New York state from 2000-2006 that matches exact patient addresses to hospital discharge records, we show that patients who live very near each other but on either side of ambulance-dispatch boundaries go to different types of hospitals. Both strategies show that higher-cost hospitals have significantly lower one-year mortality rates compared to lower-cost hospitals. We find that common indicators of hospital quality, such as indicators for “appropriate care” for heart attacks, are generally not associated with better patient outcomes. On the other hand, we find that measures of “leading edge” hospitals, such as teaching hospitals and hospitals that quickly adopt the latest technologies, are associated with better outcomes, but have little impact on the estimated mortality-hospital cost relationship. We also find that hospital procedure intensity is a key determinant of the mortality-cost relationship, suggesting that treatment intensity, and not differences in quality reflected in prices, drives much of our findings. The evidence also suggests that there are diminishing returns to hospital spending and treatment intensity.

The authors conclude that their results “should give policy makers some pause before assuming that spending can be easily cut without harming patient health, at least in the context of emergency care.”

Mike B

If someone else is paying for your medical care why do they have any right to demand that that care be the best of the best? Beggars can't be choosers. The public needs to be content with the fact that government/employer funded medical care is better than not getting care at all.

David Leppik

That's interesting, considering that ERs are generally run separately from the rest of the hospital.

Andrew B

David's post is incorrect. As a former emergency medicine chief, and presently a hospitalist, I can state that emergency departments work closely with the rest of the hospital, and would suspect the quality of its care would be comparable to, for example, an intensive care unit's care or the quality of various subspecialities.

Enter your name...

Dave's not wrong: many ERs are run by outfits like CEP America. "Generally run separately" is not the same as "doesn't work closely with".

Enter your name...

I wonder how those boundaries got drawn. Is it possible that the ambulance territories happen to correspond to socioeconomic territories? It would not be surprising if the ambulance territory for poor, elderly, racially disadvantaged, etc. people had a worse outcome than the territory for wealthy, educated people.


I don't know about NY, but here in MI the patient can choose their hospital so long as it is in county and they are not in an immediately life threatening condition. Heart attacks, burns, and traumas have to go to the closest most appropriate facility-trauma center, burn center, etc.

Andrew M

I assume the paper controls for the types of medical care received, but if not was wondering...

1) Couldn't the mortality rates be more closely related to the types of emergency visits in each hospital? For instance, the poorer, rougher part of town (likely with the lower cost hospital) was seeing patients suffering from more lethal diseases and injuries?

2) Aren't there things, like intelligence and understanding of health more generally, that someone using a more expensive hospital might better understand? So the differences in mortality rate have nothing to do with the hospital, but have to do with external factors more strongly associated with better health?

3) Social Class? Going back to work as a laborer or at McDonald's compared to taking time off from corporate America for health recovery would likely influence care...

I guess I'm questioning the "randomness" of the ambulances more than anything...