A Research Study on the Impact of Hospital Quality on Hospital Inpatient Direct Cost

Date of Award

Fall 2021

Document Type


Degree Name

Doctor of Business Administration (DBA)

Committee Chair

Andy Igonor

Committee Member

Dail Fields

Committee Member

Beverly Smith


Rising healthcare costs are a major concern in the U.S. Consumers are concerned about having access to affordable healthcare highlighting the need of understanding healthcare cost. This quantitative study investigated the impact of quality factors and control metrics on adjusted inpatient hospital direct cost. This secondary study analyzed data extracted from the Vizient clinical database (CDB) for 500 hospitals. Factor analysis was used to combine highly correlated quality variables to reduce potential bias and improve validity of results. Hierarchical multiple regression was used to test first for significance of the control variables on adjusted hospital inpatient cost then for significance of quality factors when added to the regression equation. The issues factor was obtained through factor analysis and was the linear combination of length of stay (LOS), percent of ICU cases, percent of cases with one or more (any) complications, and percent of 30-day readmissions. The early-deaths factor was just the percent of early deaths variable. The block of quality factors added significantly to the explanation of inpatient hospital direct cost when added to the regression equation. The quality factor issues had a stronger relationship to hospital direct cost than the quality factor early-deaths. These results add to the knowledge about what drives inpatient hospital direct cost. Hospitals benefit from these results by better understanding the impact of quality on inpatient direct cost to help target quality improvement. It also benefits payors and hospitals in developing pay for performance programs. Having a clearer picture of quality impact on hospital direct cost should benefit policy makers in developing policy on hospital quality and cost.