Measuring Consistency in Service Delivery: Examining the Effect of Process Standardization on Hospital Performance

Healthcare services provided to patients with similar medical conditions are known to vary. Standardization of healthcare delivery is a relatively new, yet hotly debated approach to address clinical variations. Previous research on process standardization in health service delivery has focused on measuring adherence to established protocols available only for a limited set of medical conditions. We create an alternate construct that quantifies process standardization measured in terms of consistency in services rendered, and apply it in a healthcare context using detailed nonpublic inpatient discharge data from about 35 million inpatient stays at acute care hospitals in California between 2008 and 2016. We examine the impact of such process standardization on the cost, quality, and variation in quality of care delivered at the hospital, operating unit, and medical condition level. We find that process standardization is associated with reductions in cost per discharge, readmission rate and variation in readmission rates at the hospital level. We also find that the impact of process standardization varies across different operating units and medical conditions, providing cost and quality benefit in majority of cases. We further conduct post hoc analysis on the degree of process standardization, finding that higher rates of capacity utilization and complexity of patient disease mix is associated with a lower process standardization, while increasing focus and process adherence is associated with an increase in process standardization.