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Hospital Diagnostic Aggregation and Risk-Adjusted Quality

Keywords: Risk adjustment;diagnostic aggregation;hospital quality

Objective: To demonstrate the importance of diagnostic aggregation when assessing hospitals.

Data Sources: Patient data from the Victorian Admitted Episodes Database (VAED), 1999/2000 to 2004/2005. Financial statements from public hospitals, 2002/2003 to 2004/2005.

Study Design: Risk-adjusted quality computed for each hospital using two aggregation levels. Each is then used to estimate the relationship between hospital efficiency and quality using two-stage DEA/Tobit model by Wilson and Simar (2006).

Data Collection: Selected variables from the VAED were obtained from the Department of Health in Victoria, then linked anonymously with financial statements.

Principal Findings: Hospital quality and, in some cases, its relationship with efficiency differs depending on aggregations.

Conclusions: Patient risk adjustment should be conducted using more than one aggregation level whenever possible.

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