The Relationship Between Health Care Cost and Quality

It is apparent that there has been growing debate on the relationship between the aspect of cost and quality in healthcare (Mitton et al., 2006). It is assumed that there exists a relationship between the quality and cost of health (Woolf, 1999). However, research has revealed that there is no definite relationship between cost and quality of healthcare services (Chen, 2010). In addition, the only possible relationship is based on the fact that high quality services are offered by low-cost care systems. Additionally, empirical and theoretical evidences indicate that high quality of healthcare services ultimately calls for higher costs.

According to Chen (2010), different health agencies have dissimilar roles and activities through which they address the quality and cost of healthcare. For instance, the US National Scorecard on Health system performance indicates that though the cost of healthcare in US has increased immensely, the quality has deteriorated, in addition, its efficiency still remains low (The Commonwealth Fund, 2008). The scorecard also revealed that the healthcare systems in US provide services that are far below the average benchmark yet the cost keeps on increasing. In this case, it is arguable that there is lack of proper coordination between the variation in quality and cost of healthcare.

On the other hand, the Centre for Medicare and Medicaid Services which is a private agency reveals that there is a huge disparity between the quality of healthcare services provided and the cost. For instance, it is notable that costs incurred in treatment exceed the quality of healthcare services provided (Centers for Medicare and Medicaid Services, 2008). Probably, this could be the possible reason why the US has failed to translate its medical services into better care. Moreover, it is arguable that this is what has led to emergence of financial incentives to fund organizations that provide high quality care (Chen, 2010).

It is certain that efforts have been made to improve the quality of healthcare alongside controlling costs. One of the current projects is the evolution of Pay-for-Performance project (Chen, 2010). This is a reform in healthcare. The system aims at rewarding institutions that provide affordable and high quality care. From this project, the healthcare industry has experienced profound change. In this case, private payer sponsors have been increased to fund the project. Consequently, the cost of healthcare has reduced while the quality has augmented. Another initiative is to promote patient-based cares and not insurers (Prior & Sola, 2000). It is anticipated that increasing healthcare coverage will enhance continuous and affordable care. However, one of the anticipated consequences is that there will be a significant increase in health expenditures since healthcare services will be available for everyone. This will call for significant saving by the government to maintain the cost and quality of healthcare (Prior & Sola, 2000).

In terms of the analysis, it is imperative to note that all categories of nurses are held responsible to provide high quality care to patients. In this case, it is evident that they face pervasive challenges while addressing complicated ailments. Their implication is that patients should meet calculated estimates for services provided. From this implication, it is arguable that the quality of healthcare should be proportional to cost incurred. Nonetheless, the latter is not always the case when critical analyses of healthcare institutions are carried out.


Centers for Medicare and Medicaid Services. (2008). Proposed changes to the hospital in-patient prospective payment systems. Fed Regist. 73(84):23528-23562.

Chen, M. et al. (2010). The Hospital Cost of Care, Quality of Care, and Readmission Rates: Penny-Wise and Pound-Foolish? Archives of Internal Medicine, 170(4):340–346.

Mitton C., Dionne F., Peacock S. & Sheps, S. (2006). Quality and cost in healthcare: a relationship worth examining. Applied Health Economics and Health Policy. 5(1):201-208.

Prior, D. & Sola, M. (2000). Technical efficiency and economies of diversification in health care. Health Care Medical Association, 282(24): 2358–2365.

The Commonwealth Fund (2008). Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2008. Web.

Woolf, S. (1999). The Need for Perspective in Evidence-Based Medicine. Journal of the American Management Science. 3(1): 299-307.

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