Hospitals and other care facilities are expected to track and improve on hundreds of financial and quality metrics. As the Centers for Medicare and Medicaid Services (CMS) continue to add and modify quality programs, it can be difficult for hospital leaders to focus on the most vital and easily improved metrics.
Naturally, individual facilities will focus on specific metrics depending on their current and ideal performance. While some hospitals prioritize financial performance, others may aim to improve the patient's experience. Before we go into more detail, however, let’s first define what these metrics entail.
What are hospital quality metrics?
Hospital quality metrics are a set of standards developed by CMS to quantify healthcare processes, patient outcomes, and organizational structures.
In value-based payment models, quality metrics are used to adjust provider reimbursement rates, offering a bonus in the event of above-average ratings or a penalty for failing to meet standards.
Below we’ve listed the top 10 essential hospital metrics to track, with examples from Definitive Healthcare’s comprehensive healthcare commercial intelligence.
Length of stay
Length of stay measures the length of time between a patient’s admittance to and discharge from a hospital. This metric is most often tracked over months and annual quarters, though it can also be tracked over a few weeks. Length of stay measurement can be examined for an entire hospital or a specific therapy area, such as acute myocardial infarctions (AMIs).
This data is important because it quantifies care efficiency over time. Longer patient stays are associated with a greater risk of hospital-acquired infections (HAIs) and other hospital-acquired conditions (HACs), as well as higher patient mortality rates.
Interestingly, cardiac patients are an exception to this rule. Those admitted for heart failure see lower mortality rates with shorter hospital stays, but higher readmission rates. As with other conditions, there is a risk of releasing patients too early and overlooking potentially life-threatening complications.
Patient length of stay also impacts hospital financial performance. Naturally, the longer a patient stays at a hospital, the more money is required to care for them. In addition to patient care costs, CMS incentivizes shorter patient stays where possible, offering financial bonuses to reduce the time patients spend in hospitals for an episode of care. According to our data, the average length of stay among short-term acute care hospitals in the U.S. was 4.9 days in 2023.
Readmission rates
Readmission rates track the percentage of patients that are admitted into the same or another hospital within 30 days of being discharged for the same condition—or a complication from the original episode of care. This metric measures the quality of care given to patients. High hospital readmission rates indicate that physicians and other care providers are not delivering the proper care to patients, overlooking complications or relevant patient data. Lower hospital readmission rates, by extension, indicate a strong quality of care.
The average all-cause hospital readmission rate in 2023 was 14.64% according to Definitive Healthcare data (most recent data available). Orville Hospital in California had the highest all-cause readmission rate at 19.10% — about one in five patients was readmitted to a hospital within 30 days of discharge. New York’s Hospital for Special Surgery had the lowest readmission rate at 10.10%.
High readmission rates could also be a detriment to hospital financial performance. Hospitals with the highest readmission rates may not receive full Medicare reimbursement payments as a penalty. Walking the line between short patient stays and low readmission rates is difficult but important for patient and hospital financial health.
HCAHPS
The Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey measures 64 markers of patient satisfaction. Topics included in the survey range from care quality to cleanliness of the care facility. Results from the survey are released as star ratings on a scale of 1 to 5, with 5 being the best possible score. HCAHPS scores provide actionable data on how hospitals can improve patient care and services offered.
According to Definitive Healthcare data, of the 2,761 hospitals that received an HCAHPS star rating, only 127 hospitals achieved 5 stars — about 4.6%. Roughly 29% received a 4-star rating (810 hospitals) in 2023.
Most criticisms of the HCAHPS system center around the simplistic manner of the star system. Hospital leaders argue that the ratings are misleading, as they do not always provide the whole picture of patient care. Similarly, experts expressed concern that hospitals serving poor and high-risk populations are unfairly penalized through this system—particularly hospitals with high patient volumes. Average daily census refers to the mean number of patients admitted to the hospital every day.
Mortality rates
Patient mortality rate measures the percentage of patients who die in a hospital’s care before being discharged. This metric is a strong indicator of providers’ ability to stabilize a patient’s condition following surgery or another procedure.
According to Definitive Healthcare data, the average heart attack mortality rate was 12.63% in 2023 (most recent data available). Among short-term acute care hospitals, Midland Memorial Hospital in Texas had the highest heart attack mortality rate at 17.6%, while Tisch Hospital in New York had the lowest mortality rate at 7.7%.
The average stroke mortality rate was 13.71% in 2023. Athens-Limestone Hospital in Alabama had the highest stroke mortality rate at 21.5%, while Tisch Hospital in New York had the lowest at 8%.
Bed utilization
Bed utilization rate (also called bed occupation rate) refers to the number of hospital beds being used at any given time. Knowing bed demand in real-time is important to providers who need to know the difference between available beds and patients awaiting care. According to Definitive Healthcare data, the average bed utilization rate is 50.97% in 2023. The rate is higher for urban hospitals than for rural hospitals.
Balancing bed availability can be difficult. If occupancy is too low, the hospital is likely to lose money through unnecessary staffing and facility maintenance. If occupancy is too high, care quality could decline because there aren’t enough clinicians to care for the admitted patients.
Incidents
Hospital incidents include unintentional consequences or side effects of hospital procedures, including conditions like sepsis, postoperative respiratory failure, pulmonary embolisms, hemorrhages, and other reactions or infections. This metric measures the ability of healthcare professionals to provide comprehensive, high-quality care to patients without triggering an adverse reaction.
Tracking hospital incidents is vital to understanding the quality of care a facility provides. Incidents provide hard data on what steps a hospital should take to improve its services and reduce patient mortality and readmission rates. According to Definitive Healthcare data, 706 hospitals reported receiving a penalty for hospital-acquired conditions in fiscal year 2023, which may have caused a loss of more than $175 million.
CMS program performance
CMS spearheads dozens of initiatives aiming to reduce overall healthcare costs and improve care quality across the country.
Some of these programs, like the Medicare Shared Savings Program, target accountable care organizations (ACOs). Others, like Fee-For-Service Part B, target hospital spending. Regardless of the target facility or organization, CMS’s value-based programs offer financial rewards for improvement on a variety of clinical and quality metrics.
Participation in these programs can lead to improvement in care quality, efficiency, technology use and more. CMS incentive programs serve as beta tests to improve care delivery while lowering costs. In addition to the obvious financial incentives, participating facilities also have a plethora of data to analyze to improve on the most relevant measures.
You can review the scores—and potential penalties—a hospital has received as part of a CMS program in its facility profile in HospitalView.
Average cost per discharge
Tracking the average care costs per patient discharged can aid hospitals in understanding which therapy areas see overspending. Similarly, this metric shows where hospitals make the greatest profit and whether the costs of patient care improved the patient’s outcome. Cost per discharge is a dynamic measure that can be adjusted for a hospital’s case mix and other patient population demographics.
Tracking this metric can help hospitals understand long-term spending by therapy area and adjust care provision accordingly. Over time, high care costs and low profits can negatively impact hospital performance and care offerings, reducing the variety of services available and physicians on staff.
Cost per discharge can be measured in a facility’s profile in HospitalView.
Operating margin
A hospital’s operating margin refers to the facility revenue after subtracting operating costs such as wages, medical equipment and supplies, rent, and other expenditures. To remain operational, hospitals must be able to pay these fixed costs without going into debt.
According to Definitive Healthcare data, the average hospital net operating margin among short-term acute care hospitals was –9.63% in 2023. Of hospitals with a positive operating margin, the average was 13.54%. Hospitals with a negative operating margin averaged -25.79%.
Bad debt
Bad debt refers to revenue loss that occurs when a hospital requests payment from a patient for care provision and does not receive the full amount.
Under the original guidelines, any lack of repayment was reported as bad debt. As of January 2019, bad debt is only valid if there was an event in a patient’s life, such as unemployment, that led to the inability to pay for their care.
A high bad debt ratio can impact the amount of charity care a hospital can provide to patients. Bad debt also negatively impacts hospital revenue, restricting available services.
According to Definitive Healthcare data, the average bad debt to net patient revenue ratio was 6% in 2023. Only six of the 3,068 hospitals reporting bad debt claimed a negative ratio.
Learn more
Want to learn more about the significance of hospital quality metrics? Read our blog: Why hospital quality performance is valuable to you. You’ll explore the financial incentives surrounding quality metrics as well as the wealth of opportunities available to those who take the time to understand them.
Want easy access to financial and quality metrics for the hospitals in your market? Start a free trial today to get even more healthcare metrics and see how healthcare commercial intelligence from Definitive Healthcare can shape your business strategy.
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