The Health Care Manager

Volume 36, Number 4, pp. 312–319

Copyright # 2017 Wolters Kluwer Health, Inc.
All rights reserved.

Hospital Value-Based Purchasing

The Association Between Patient Experience
and Clinical Outcome
D. Rob Haley, PhD, MBA, MHS; Hanadi Hamadi, PhD, MS;
Mei Zhao, PhD, MHA; Jing Xu, PhD, MHA; Yi Wang, BS
The Affordable Care Act of 2010 introduced a Hospital Value-Based Purchasing Total Performance
Score for payment purposes and to evaluate hospital quality of care. In fiscal year 2016, Total
Performance Score was composed of (1) Clinical Processes of Care, (2) Patient Experience of
Care, (3) Outcome, and (4) Efficiency domains. The objective of this study was to examine the
association between the Patient Experience of Care and Outcome domains. The Donabedian
model of structure, process, and outcome was used as a conceptual framework for this study.
Data from the 2015-2016 Area Health Resource File, the 2016 American Hospital Association
database, and the 2016 Hospital Value-Based Purchasing were used. Univariate, bivariate, and
multivariate analyses were conducted to examine the impact of patient experience on outcome
of care and hospitals. From a sample of 1866 hospitals across the United States, patient experience
was significantly and positively associated with patient outcome. In addition, for-profit hospitals,
hospitals with more beds, nonteaching hospitals, and hospitals located in less competitive markets
were found to have a significant association with better outcomes. The study’s findings are im-
portant as policy makers consider additional or alternative indicators that may better represent
and encourage higher quality of care within acute care hospitals. Key words: ACA, Medicare,
patient experience, HVBP, TPS

HE UNITED STATES is perhaps the coun-
T try with the most advanced medical
resources and technology.1 However, it is
plagued by high costs, inefficiency, and poor
health outcomes. In 2000, the Institute of
Medicine published a groundbreaking report
estimating that as many as 1 million people
were injured and 98 000 patients died annually
as a result of medical errors.2 The Institute of
Medicine called for a national effort to reduce
medical errors, resulting in limited progress.3
Author Affiliations: Health Administration Programs,
Public Health Department, Brooks College of Health,
University of North Florida, Jacksonville.
The authors have no funding or conflicts of interest to
disclose.
Correspondence: D. Rob Haley, PhD, MBA, MHS, Health
Administration Programs, Public Health Department,
Brooks College of Health, University of North Florida, 1
UNF Dr, Jacksonville, FL 32224 (rhaley@unf.edu).
DOI: 10.1097/HCM.0000000000000183
312
In addition, fraud, waste, and abuse in the US
health care system is estimated at $75 billion a
year, equivalent to approximately 30% of health
care spending.4 Moreover, overtreatment can
directly harm patients as a result of surgical
complications, drug toxicity, and hospital-
acquired infections.
Health plans have traditionally shielded
consumers from cost and value decisions
as plan benefits typically had reasonable
copayments and deductibles.5 In addition,
consumers were often limited in their choice
of providers to those that were in the health
plan network, and provider quality data were
not easily obtained. Insured consumers had
little incentive to choose providers based on
quality and cost. Therefore, although much
effort was made to implement and refine
hospital report cards to create more trans-
parency for health care quality, it was not
necessarily wanted or used by consumers or
the health care industry.6
In 2011, the Robert Wood Johnson Founda-
tion and the Harvard School of Public Health

Copyright © 2017 Wolters Kluwer Health, Inc. All rights reserved.


conducted a national poll of 1034 adults aged
18 years and found that many consumers be-
lieve that there is little to no difference in the
quality of hospitals within one’s community.
Consumers were more likely to choose a hos-
pital that they are familiar with rather than on
quality ratings, and approximately half of those
surveyed would choose a surgeon based on a
reference from a family member rather than
on quality ratings.7 Therefore, consumers were
not demanding greater transparency or a higher-
quality health care system.
Background
In November 2007, the Centers for Medi-
care & Medicaid Services (CMS) and one of
the largest payers of health care services in
the United States recommended a Medicare
value-based purchasing program for hospi-
tal services.8 This program was designed to
provide payment incentives to encourage
providers to focus on better health outcomes
and discourage unnecessary or ineffective
care.9 In 2010, the Patient Protection and
Affordable Care Act was implemented into
law providing a focus on data and health
care quality in an effort to encourage a
higher-quality and more efficient health care
system.10
As part of the Patient Protection and Afford-
able Care Act, CMS proposed an inpatient Hos-
pital Value-Based Purchasing (HVBP) program
that recommended a new Total Performance
Score (TPS) methodology to measure individual
hospital performance. The TPS methodology
was implemented in fiscal year (FY) 2013 and
included a Clinical Processes of Care domain
that comprised 70% of the TPS and a Patient
Experience of Care Dimensions domain that
was derived from the Hospital Consumer As-
sessment of Healthcare Providers and Systems
(HCAHPS) survey that comprised 30% of TPS.11
In FY 2016, the TPS evolved to include (1)
Clinical Processes of Care, (2) Patient Expe-
rience of Care (PEOC), (3) Outcome, and (4)
Efficiency domains. The Clinical Processes of
Care domain accounted for 10% of a hospi-
tal’s TPS, the PEOC domain accounted for
25%, the Outcome domain accounted for
Copyright © 2017 Wolters Kluwer Health, Inc. All rights reserved.
Patient Experience and Outcome 313
40%, and the Efficiency domain accounted
for 25%.12
The PEOC domain accounts for a sizable
25% of a hospital’s TPS and is assumed to be
an important indicator of quality care. How-
ever, studies on the relationship between pa-
tients’ experiences, or satisfaction, and the
quality of clinical care have been inconclu-
sive.13 For example, Isaac and colleagues14
found a relationship between patient per-
ception of care and measures of hospital
quality. They used data from the Hospital
Quality Alliance to assess process measures
and Patient Safety Indicators to measure
medical and surgical complication rates for
927 hospitals. They found that patient expe-
riences of care were related to measures of
technical quality of care.14 Another study
compared hospitals that participated in the
Patient Satisfaction Survey, the CMS Surgical
Care Improvement Program, and the em-
ployee Safety Attitudes and Safety Climate
Questionnaire and found that patient satis-
faction was not associated with performance
on process measures.15 In addition, there is
no consensus regarding the legitimacy of
using patient experience in a quality assess-
ment indicator.16
The relationship between the HVBP PEOC
and Outcome domains is the subject of much
debate within the medical community and
remains inconclusive because a major limita-
tion of prior studies was that they tested only
a distinct aspect of patient satisfaction.17 As a
result, little is known about the relationship
between patient satisfaction experience and
health outcomes, and far less is known about
the relationship of the TPS PEOC domain and
its linkage to hospital outcomes of care.18,19
With Patient Experience representing such a
large portion of a hospital’s TPS, it is important
for hospital administrators and policy makers to
understand the linkage between the Patient
Experience and Outcomes domains to deter-
mine if it is an appropriate indicator of quality
care. Therefore, the primary purpose of this
study was to gain a better understanding of the
relationship between the PEOC and the Out-
come of care domains.
314 THE HEALTH CARE MANAGER/OCTOBER–DECEMBER 2017
Conceptual model
The Donabedian model was used as a con-
ceptual framework to assess the relationship
between patient experience and health out-
comes because of its use in evaluating quality
of care.20 The Donabedian model provides a
structure, process, and outcomes framework
for care evaluation.21 In this study, structure
describes the context in which care is deliv-
ered, including hospital characteristics and
market characteristics. Structural elements
included in this analysis are organizational
ownership, system status, organizational size,
teaching status, location of organization, per-
capita income, beds per 1000 population,
percent of the population 65 years or older,
and percentage of the hospital’s Medicare
and Medicaid population. The TPS also in-
cludes Clinical Processes of Care measures.
The impact of these measures on the TPS has
been reduced from 70% in FY 2013 to 10% in
FY 2016.
In HVBP, a patient’s experience, or satis-
faction, is an important outcome of care for
higher reimbursement of services. Currently,
25% of a hospital’s TPS is based on how
patients rate their hospital experience on
the HCAHPS patient satisfaction survey. It
was created after a joint developmental effort
by the Agency for Healthcare Research and
Quality and the CMS. The HCAHPS survey
allows patients to rate their inpatient experi-
ences and perceptions of care because the
effectiveness of health care may be deter-
mined by a patient’s satisfaction with the
health services provided.22 The HCAHPS was
nationally implemented in October 2006.
Clinical outcomes of interest include 30-
day mortality rates for acute myocardial in-
farction, heart failure, and pneumonia; the
central line–associated bloodstream infection
measure; the catheter-associated urinary tract
infection measure; the surgical site infection
strata; and the Agency for Healthcare Research
and Quality Patient Safety Indicators 90 Com-
posite. Outcome became part of a hospital’s
TPS in FY 2014 and represented 25%. In FY
2016, Outcome represented 40% of a hospi-
tal’s TPS.
Copyright © 2017 Wolters Kluwer Health, Inc. All rights reserved.
Although there are studies that examine
the relationship between patient satisfaction
and clinical outcome of care for specific mor-
bidities,23-25 only a paucity of studies have
focused on the relationship between the
HVBP PEOC and Outcome domains.18,19 The
use of patient experience as a measure of
quality in HVBP has been controversial be-
cause there remains a lack of evidence on the
relationship between the PEOC domain and
patient outcomes.18 However, it is hypothe-
sized that there is a positive association be-
tween patient experience and outcomes as
satisfaction should increase if patients receive
their expected or better care. Therefore, our
hypothesis is as follows:
Hospitals with higher TPS PEOC scores will
have higher Outcome domain scores.
Gaining a better understanding of the po-
tential relationship between the PEOC and
Outcome domains is especially important to
hospital administrators and policy makers be-
cause these measures have become a greater
proportion of a hospital’s TPS and a greater
impact on its financial performance.
MATERIALS AND METHODS
Study data
In this study, we used the 2015-2016 Area
Health Resource File, the 2016 American
Hospital Association database, and the 2016
HVBP to examine the relationship between
the PEOC and clinical Outcome domains. The
Area Health Resources Files data focus on
and contain county-, state-, and national-level
health care and population health-related fac-
tors and are pulled from more than 50 sources.
Available data include information on health
care professionals, hospitals and health care
facilities, and census, population data, and
environment.
The American Hospital Association database
includes hospital-level data on more than 6000
hospitals in the United States.26 The HVBP
database contains a list of participating hos-
pitals and their corresponding scores on
clinical process of care, patient experiences,
outcomes, efficiency, and overall HVBP total

performance score. A hospital’s TPS for the FY
2016 HVBP program is calculated as follows:
Total performance score = 0.10  clinical
process of care + 0.25  patient experience
of care + 0.40  outcome of care + 0.25 ef-
ficiency of care.
This study’s key dependent variable is the
Outcome score, and the key independent
variable is HVBP PEOC.
To control for differing organizational and
market characteristics, we use the following
variables: organizational ownership, system sta-
tus, organizational size, teaching status, location
of organization, per-capita income, beds per
1000 population, percent of the population
65 years or older, and percentage of the hospi-
tal’s Medicare and Medicaid population. Orga-
nizational size is defined by the number of
staffed beds and is categorized as small (<100),
medium (100-199), and large (>200 staffed
beds). According to the literature, hospital size
helps provide an indication of hospital quality.27
Organizational ownership is categorized as
nonfederal government, for profit, and not for
profit and is utilized to provide an indication of
financial and quality performance.28
System status is a binary variable and indicates
if the organization is part of a larger system and
provides an indication into the resources avail-
able to the organization.29 Teaching status has
been demonstrated to correlate with patient
safety scores and therefore is an important
control variable for this study.30 Organization
location is a binary variable and indicates if
the organization is located in a rural or urban
area and provides indication as to the resource
viability of the organization. Per-capita income
and percent of the population 65 years or older
are measured as continuous variables and pro-
vide indication of the availability of resources
for the hospitals within the analysis.31 Finally,
the percentages of the Medicare and Medic-
aid population are reported as continuous
variables and provide an indication of the fi-
nancial health of the organization.32,33
Statistical analysis
For the analysis, we used a cross-sectional
design approach using multiple sources of
Copyright © 2017 Wolters Kluwer Health, Inc. All rights reserved.
Patient Experience and Outcome 315
secondary data. Univariate, bivariate, and mul-
tivariate analysis were conducted to examine
the impact of patient experience on outcome
of care and hospitals. Prior to conducting the
multivariable analysis, the data were exam-
ined for normality using skewness/kurtosis
tests and for multicolinearity using Pearson
correlation matrix (all correlation coefficients,
<0.60). We report percentages for categorical
variables and means for continuous variables.
We used a multivariable linear regression anal-
ysis to examine the relationship between pa-
tient experience and outcome of care by
selected hospital characteristics. Results are
presented as predicted probabilities (95%
confidence intervals).We tested for statisti-
cally significant differences using Student t
test. A 2-sided P = .05 was set to denote
statistical significance. All statistical analyses
were performed using STATA software version
14.0 (StataCorp LP, College Station, Texas).
RESULTS
Our findings were extracted from a sample
of 1866 hospitals across the United States.
Organizational characteristics of these hospi-
tals and their Health Service Area are reported
in Table 1. The mean score for patient expe-
rience under the HVBP program was 34.56
with a standard mean of 17.22, and the mean
for patient outcomes was 49.49 with an SD of
16.44. The mean Herfindahl-Hirschman Index
(HHI) was 0.62 with an SD of 0.39. The mean
percent of population 65 years or older was
14.85%. Approximately 52% of the population
was on Medicare, and 19% were Medicaid
beneficiaries. The average per-capita income
for the sample was $44 478.88, and there were
2.58 beds per 1000 population.
Within our sample, 22.78% of hospitals
were small hospitals, 61% were medium size,
and 15.86% were more than 200 beds. Fur-
thermore, the majority of the hospitals in our
sample were not for profit, and only 26.9%
were for profit. Approximately, 46% of hos-
pitals were either nonteaching or minor
teaching hospitals, and only 7.77% were des-
ignated as major teaching hospitals. Lastly,
overwhelmingly 81.67% of the hospitals were
316 THE HEALTH CARE MANAGER/OCTOBER–DECEMBER 2017

Table 1. Descriptive Statistics of Hospitals’ outcome along with the hospital size. Patients
Organizational and Environmental who were admitted to not-for-profit hospitals,
Characteristics compared with those admitted to for-profit
hospitals, had an average of 2.34-point de-
All Hospitals crease in patient outcome score with a 95%
confidence interval of 4.11 to 0.56. Hos-
Descriptive Mean
Characteristics (n = 1866) SD pitals’ teaching status had a statistical impact
on patient outcome. Within the hospital envi-
Value-Based
Purchasing scores ronment, we found the number of beds per
Patient Experience 34.56 17.22 hospital ( = .69) was statistically associated
of Care score with patient outcome.
Outcome score 49.49 16.44
Herfindahl-Hirschman 0.62 0.39
Index DISCUSSION
Hospital Medicare 51.71 12.71
percentage
Hospital Medicaid 19.12 10.63
Our study provides important insight into
percentage the relationship between the HVBP’s TPS PEOC
Hospital beds (1000s) 2.58 4.09 domain and the Outcome domain. Specifically,
Aging population, % 14.85 3.84
Per-capita income 44 478.84 11 742.9 our research supported our hypothesis that
(1000s) hospitals with higher PEOC scores (HCAHPS)
had higher Outcome scores. This is an im-
Percentage
(n = 1866) Population portant finding because standardized outcome
measures either were difficult to obtain or did
Categorical variables
Rural
not exist for hospitals across the United States
Yes 18.33% 342 prior to the implementation of the CMS HVBP.
No 81.67% 1524 In addition, the recent HCAHPS data allow for a
Ownership
For profit 26.90% 502
more robust indicator of patient experience
Not for profit 73.10% 1364 that may likely provide a more complete repre-
Size sentation of a hospital’s patient experience.
Small 22.78% 425
Medium 61.36% 1145
While our study identified a positive rela-
Large 15.86% 296 tionship between the PEOC and Outcome
Teaching hospital domains, further research is needed to better
Nonteaching 45.66% 852
Major 7.77% 145
understand this relationship. For example, it
Minor 46.57% 869 is important to understand if hospitals that
focus their limited resources on patient ex-
perience provide a similar and targeted focus
located in an urban setting, whereas 18.33% of resources on providing better patient out-
were rural hospitals. comes. Perhaps patient experience is heavily
Table 2 displays the multivariable regres- influenced by technology that allows the pa-
sion analysis results. We found that better tient to become better informed health care
outcomes were related to better patient ex- consumers that can identify what represents
perience. For every 1-unit increase in patient high-quality and evidence-based care within
experience, we found a 0.06-point significant hospitals, thus creating a closer association
increase in patient outcome with a 95% con- between patient experience and clinical out-
fidence interval of 0.01 to 0.11. Furthermore, comes. In addition, more satisfied patients
we found a significantly positive relationship may have more optimism with their health
between hospital HHI and patient outcome care services, and this optimism could posi-
( = 2.59). The higher the HHI was, hence tively influence outcomes.
lower competition, the higher outcome scores However, more research is needed to under-
were. We also identified hospitals’ ownership stand these important relationships. For example,
status to be statistically significant to patient studies have found that better provider-patient

Copyright © 2017 Wolters Kluwer Health, Inc. All rights reserved.

 Patient Experience and Outcome 317

Table 2. Patient Outcome and Patient Experience

Patient Outcome
Coefficient SE P 95% Confidence Interval
a
Patient Experience 0.06 0.02 <.05 0.01 to 0.11
Herfindahl-Hirschman Index 2.59 1.08 <.05a 0.47 to 4.70
Ownership (reference: for-profit)
Not-for-profit 2.34 0.91 <.01a 4.11 to 0.56
Medicare percentage 0.04 0.04 — 0.03 to 0.11
Medicaid Percentage 0.02 0.04 — 0.10 to 0.06
Size (reference: small)
Medium 1.32 1.05 — 3.38 to 0.74
Large 3.76 1.56 <.05a 6.81 to 0.71
Teaching hospital
Major 5.45 1.75 <.01a 8.88 to 2.03
Minor 2.47 0.86 <.01a 4.16 to 0.77
Rural (reference: urban) 0.47 1.16 — 1.80 to 2.74
Per-capita income (1000s) 0.00 0.00 — 0.00 to 0.00
Aging population, % 0.13 0.11 — 0.08 to 0.35
Beds per hospitals (1000s) 0.69 0.10 <.01a 0.49 to 0.89

MSE = 15.99; adjusted R2 = 0.05; Prob > F = 0.

a
Statistically significant.

communication results in higher patient sat-
isfaction.16,34 Perhaps smaller hospitals pro-
vide a more conducive organizational and
physical environment to better communicate
with patients compared with larger, more com-
plex facilities. Similarly, rural hospitals are typi-
cally smaller as well. Smaller and rural hospitals
are generally located in health service areas
where the population may be more familiar
with each other. This familiarity of hospital
community members may be an important
influence for patient experience. Also, research
indicates that not-for-profit hospitals are per-
ceived by patients as more ‘‘trustworthy’’ and
‘‘warm’’ than for-profit hospitals.35 Perhaps
this positive perception of not-for-profit hos-
pitals may influence patient experience.35
Finally, little is known about the relation-
ship between market competition and HVBP
measures.9 However, our research found that
hospitals located in less competitive health
service areas were more likely to have better
Outcome domain scores. Because research
indicates that many consumers believe that
there is little to no difference in the quality of
hospitals within one’s community, it may be
likely that hospitals in more competitive
health service areas are less likely to invest
their limited resources in providing better
patient outcomes of care.7,36 More research
is needed to better understand this important
and significant relationship.
RESEARCH LIMITATIONS AND FUTURE
RESEARCH
This study uses data from multiple databases
and provides important insight into the rela-
tionship between the CMS HVBP Outcome
and PEOC domains. However, this research
cannot be generalized to other outcome or
patient satisfaction measures beyond that of
HCAHPS. In addition, hospitals in our sample
were all part of a health system. Individual
hospitals lacking the support and resources
of a health system may behave differently than
those hospitals within our sample. Similarly,
hospitals that did not participate in the CMS
HVBP program may behave differently than
those that participate. Future research should
focus on hospitals that are not part of a health
system and those that do not participate in the
CMS HVBP to better understand if they have
similar associations with their Outcome and
Patient Experience indicators.
Finally, our research found an association
between the CMS HVBP Outcome domain
and specific factors. However, an association

Copyright © 2017 Wolters Kluwer Health, Inc. All rights reserved.

318 THE HEALTH CARE MANAGER/OCTOBER–DECEMBER 2017
may not necessarily represent a causation.
Therefore, future research should focus on
identifying the causation of higher and lower
Outcome domain measures and their rela-
tionship with specific structure and process-
of-care measures.
PRACTICE IMPLICATIONS
Despite its limitations, this study provides
important insights into the relationship be-
tween the CMS HVBP Outcome domain, PEOC
domain, and certain hospital structural charac-
teristics. The results indicate that hospitals that
have better patient experience scores are more
likely to have better outcomes. In addition,
hospital ownership, bed size, and teaching sta-
tus were found to be associated with patient
outcome. Specifically for-profit hospitals, hospi-
tals with more beds, and nonteaching hospitals
were found to have a significant association
with better outcomes. Finally, hospitals located
in less competitive markets were more likely
to have better outcome scores compared
with those located in more competitive mar-
kets. It may be important for policy makers
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Patient Experience and Outcome 319
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