| This study evaluated the relationship of hospital quality of care as measured by mortality scores to hospital cost of capital as represented by average cost of debt. A composite mortality score (weighted average of Hospital Compare's risk adjusted mortality rate for each hospital) was regressed against the hospitals' average cost of debt using OLS and the Stata 11 robust clustering function to adjust for repeated occurrences of hospitals across years. The data base consisted of acute care hospitals with interest expense observed over the three year period 2008–2010 (n=3420). Control variables included a number of hospital characteristic (e.g., number of beds, occupancy percentage, etc.) and financial variables (e.g. developed from the literature). The results suggest that lenders and rating agencies neither reward nor penalize hospitals for their reported quality scores. The result was not different between not-for-profit hospitals and for-profit hospitals, nor did the result vary significantly with time. |
