The Effects of Regulation, Competition, and Ownership on Mortality Rates Among Hospital Inpatients

We examined the influence of the regulation of hospital rates, state certificate-of-need programs, competition, and hospital ownership on mortality rates among inpatients receiving care under Medicare for 16 selected clinical conditions that were studied as a group. Data were obtained from the records of 214,839 patients who received care in 981 hospitals in 45 states from July 1, 1983, through June 30, 1984. We found significant associations between higher mortality rates among inpatients and the stringency of state programs to review hospital rates (P less than or equal to 0.05), the stringency of certificate-of-need legislation (P less than or equal to 0.01), and the intensity of competition in the marketplace, as measured by enrollment in health maintenance organizations (P less than or equal to 0.05). Hospitals in the states with the most stringent review procedures for hospital rates had ratios of actual to predicted death rates that were 6 to 10 percent higher than those of hospitals in states with less stringent rate-review programs (P less than or equal to 0.001). Hospitals in the states with the most stringent procedures for reviewing applications for certificates of need had ratios of actual to predicted death rates that were 5 to 6 percent higher than those of hospitals in states with less stringent certificate-of-need procedures (P less than or equal to 0.05). There was no statistically significant association between mortality rates among inpatients and either the type of hospital ownership or the number of hospitals competing in the market area. Additional analyses, which examined alternative explanations for these findings, failed to change the results. These findings raise serious concerns about the welfare of patients who are admitted to hospitals in highly regulated areas and those admitted to hospitals in relatively competitive markets. They suggest that it is important to incorporate quality-assurance procedures and systems to monitor patients' outcomes into public and private programs designed to contain costs or promote competition, or both.