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In The Quality of Health Care Providers(NBER Working Paper No. 7327), authors Mark McClellan and Douglas Staiger describe a systematic approach to assessing hospital quality which overcomes many of the key limitations of existing methods. First, it reduces measurement costs by isolating particular combinations of indicators that provide a truer measure of quality at a hospital. Second, it performs better than alternative approaches in reducing the problem of "very noisy" measurements resulting from small patient samples and large numbers of factors outside the health care system affecting patient outcomes. Finally, the authors' approach allows them to make better predictions about the current and future quality of providers than existing methods do. Using the same methodology and data on patient outcomes from 1984 to 1994, the authors attempt to compare quality between for-profit and not-for-profit hospitals. In Comparing Hospital Quality at For-Profit and Not-for-profit Hospitals(NBER Working Paper No.7324), they observe that, on average, for-profit hospitals have higher mortality among elderly patients with heart disease, and that this difference has grown over the past...
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