Hospital quality-review spending and patient safety: a longitudinal analysis using instrumental variables.

Since the landmark Institute of Medicine's (IOM's) 2000 report first focused attention to the problem of the safety of inpatient care, it has been a priority of hospital staffs, administrators, and policymakers. Despite remarkable progress in the 20 years since the IOM report, there is still much unknown about how these improvements in safety have been achieved. Using a 12-year (2004–2015) panel of Florida acute-care general hospitals, we estimate the relationship between hospital expenditure on peer (or quality) review and patient-safety outcomes, using a composite measure of patient safety (PSI-90) from the Agency for Healthcare Research and Quality. Our identification strategy to account for endogenous quality-review (QR) expenditure relies on exogeneity from within the hospital, in which we use staffing of non-acute ancillary services as instruments for QR expenditure. Estimation of hospital fixed effects (FE) with instrumental variables (FEIV) yields a statistically significant and beneficial effect of QR expenditure on patient safety. We find that, on average, a standard-deviation ($2.4 million) increase in QR expenditure is associated with a 16% decrease in adverse patient-safety events (i.e. PSI-90). Broadly, this study represents a unique contribution to the literature by examining a direct relationship between hospital peer-review spending and inpatient quality of care. [ABSTRACT FROM AUTHOR]