Quality Improvement Spillovers: Evidence From the Hospital Readmissions Reduction Program

Abstract

Problem Definition: Quality knowledge spillover can enhance the total effectiveness of quality improvement initiatives. Whereas prior research has shown limited quality improvement spillovers in manufacturing settings, we study the presence and moderators of quality improvement spillovers in a service setting, specifically hospital inpatient care.
Methodology/Results: Focusing on a national healthcare quality improvement policy, the Hospital Readmissions Reduction Program (HRRP), we employ several triple-differences models on two large databases at the state and national level and find positive quality spillovers in the healthcare setting. Specifically, we show that HRRP led to a significant improvement in 30-day readmissions for those with non-targeted clinical conditions or insurance types. In addition, we identify task similarity and operational focus as two contributing factors that impact quality spillovers positively and negatively, respectively. Further, we show that hospitals gain these quality improvement achievements without intensifying care provided. To the contrary, meaningful quality improvements led to up to 3% reduction in hospitalization costs.
Managerial Implications: This paper contributes new insights on how policy makers can propose narrow public policies that achieve broader results by exploiting beneficial quality improvement spillovers.

Keywords: Healthcare, Service operations, Quality knowledge, Quality spillover, Focus, Public policy, Empirical