Evaluating hospital performance

Patient selection remains a major challenge in evaluating hospital performance. We exploit the quasi-random assignment of patients to hospitals, based on a rotation schedule between hospitals in the Upper Austrian capital of Linz. In an instrumental variable (IV) framework, we use high-quality administrative data and estimate hospital performance with respect to in-hospital mortality, 30-day mortality, and 30-day readmission. We contrast these results with those of traditional risk adjustment models based on patient observables. We find that the assessment of hospital performance is sensitive to the inclusion of patient observables and that increasing the number of socio-economic covariates to better control for patient risk profiles does not always help bring risk-adjusted estimates closer to IV estimates. The divergence between methods is most pronounced for readmissions, where risk-adjustment models imply large and statistically significant differences between hospitals, whereas IV estimates are substantially smaller and not statistically significant. Our results suggest that common risk adjustment does not adequately control for patient differences between hospitals and that hospital quality indicators based on common administrative data should be interpreted with caution. The trend toward personalized medicine may support the process of collecting more clinical information at the individual level, thus allowing for better quality comparisons between hospitals.

Institutions

Publication Details

Journal
The European Journal of Health Economics
Published
2026-05-19
DOI
https://doi.org/10.1007/s10198-026-01936-1
Primary Topic
Primary Care and Health Outcomes
Type
article
Field-Weighted Citation Impact
0.00

Funders

Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Evaluating hospital performance

The European Journal of Health Economics
Primary Care and Health Outcomes
article

Evaluating hospital performance

article en

Abstract

Patient selection remains a major challenge in evaluating hospital performance. We exploit the quasi-random assignment of patients to hospitals, based on a rotation schedule between hospitals in the Upper Austrian capital of Linz. In an instrumental variable (IV) framework, we use high-quality administrative data and estimate hospital performance with respect to in-hospital mortality, 30-day mortality, and 30-day readmission. We contrast these results with those of traditional risk adjustment models based on patient observables. We find that the assessment of hospital performance is sensitive to the inclusion of patient observables and that increasing the number of socio-economic covariates to better control for patient risk profiles does not always help bring risk-adjusted estimates closer to IV estimates. The divergence between methods is most pronounced for readmissions, where risk-adjustment models imply large and statistically significant differences between hospitals, whereas IV estimates are substantially smaller and not statistically significant. Our results suggest that common risk adjustment does not adequately control for patient differences between hospitals and that hospital quality indicators based on common administrative data should be interpreted with caution. The trend toward personalized medicine may support the process of collecting more clinical information at the individual level, thus allowing for better quality comparisons between hospitals.

The European Journal of Health Economics
Johannes Kepler University of Linz (AT), Auckland University of Technology (NZ)
Auckland University of Technology, New Zealand
Reduced inequalities
Openalex Percentile: Top 3%
Primary Care and Health Outcomes
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.