27 Sep 2013  Working Papers

The Impact of Conformance and Experiential Quality on Healthcare Cost and Clinical Performance

Executive Summary — This study examines the relationship between hospital's focus on both conformance and experiential dimensions of quality and their impact on financial and clinical outcomes. Conformance quality measures the level of adherence to evidence-based standards of care achieved by the hospitals. Experiential quality, on the other hand, measures the extent to which caregivers consider the specific needs of the patient in care and communication, as perceived by the patient. These are important dimensions to investigate because hospitals may face a tension between improving clinical outcomes and maintaining their financial bottom-line. However, little has been known on the joint impact of these dimensions on hospital performance in terms of cost and clinical quality. The authors' study, which examined data from multiple sources for the 3,458 U.S. acute care hospitals, is a first step towards understanding these relationships. Results show that hospitals with high levels of combined quality are typically associated with higher costs, but better clinical outcomes, as measured by length of stay and readmissions. These results suggest that hospitals face a tradeoff between cost performance and clinical outcomes. The study also finds that the effect of conformance quality on length of stay is dependent on the level of experiential quality. Taken together, these findings underline the important synergy that exists between conformance and experiential quality with regards to clinical outcomes, a topic that has been completely overlooked in the extant literature. Key concepts include:

  • Hospitals with high levels of combined quality are typically associated with higher costs, but better clinical outcomes, as measured by length of stay and readmissions.
  • Integrating experiential quality into the delivery of care requires caregivers to understand that conformance quality is important, but just one part of achieving excellent clinical outcomes.
  • Experiential quality requires ensuring that patients have a voice in their own care. This might trigger cultural resistance given the inherent bias towards conformance quality.
  • The need for hospitals to promote such radically new representation, despite its clear health benefits, implies an inevitable cost-quality tradeoff. However, this tradeoff might diminish over time, as the culture slowly shifts and caregivers learn to better integrate both process quality dimensions in a more supportive environment.
  • This study addresses a missing gap on the benefit for a systemic approach to learning in care delivery.h

 

Author Abstract

The quality of operational processes is an important driver of performance in hospitals. In particular, processes that reliably deliver both evidence-based and patient-centered care, which we call conformance and experiential quality respectively, have been argued to result in better clinical outcomes. However, hospitals, in general, struggle to perform well on these quality dimensions. Operations management theory suggests that this may be due to the cost involved in combining these dimensions. In other words, there may be a tradeoff between clinical and financial performance. To investigate this issue in detail, we use longitudinal data from 3,458 U.S. acute care hospitals and examine the relationships between conformance and experiential quality and two important dimensions of hospital performance: cost efficiency and clinical outcomes. We find that hospitals with high levels of both conformance and experiential quality demonstrate better clinical outcomes as measured by length of stay and readmissions, but have worse performance with regard to cost efficiency. This may result in hospitals inability to invest in both conformance and experiential quality due to the greater financial burden. We conclude by highlighting that although hospitals may need to persevere through a short-term financial hardship to achieve high levels of both conformance and experiential quality, financial performance benefits are likely to emerge in the longer term. Our results have implications for researchers and policy makers investigating the operational processes, clinical outcomes, and financial performance of hospitals.

Paper Information