The Centers for Medicare and Medicaid Services (CMS) publishes quality ratings on a scale of one to five stars for thousands of US hospitals. However, the method used to calculate these ratings is problematic, according to Chicago Booth’s Dan Adelman. To address some of its limitations, Adelman developed the Efficient Frontier Hospital Ratings system, an alternate method of generating quality scores. To illustrate how his system compares, he inputted the same data (collected over 2014–18) that the CMS used for its February 2019 release and scored more than 3,700 individual hospitals. A searchable database showing how each of these hospitals fared under the two systems is now available here on the Chicago Booth Review website.
The CMS and other reviewers use mostly the same data, but the results they come up with can be very different. The Johns Hopkins Hospital, for example, was, in 2019, ranked as the No. 3 hospital in the country by US News & World Report and received a top-5-percent designation from Healthgrades. But it received a B in the fall from Leapfrog and only three stars from the CMS.
While the CMS rates US hospitals as a single homogeneous group, Adelman introduced a way to put hospitals into subgroups with similar characteristics, and then recalculate their ratings. These subgroups include:
- hospitals of similar sizes
- hospitals that serve patients in similar socioeconomic groups
- hospitals that are teaching institutions—for example, affiliated with a university
The example below, highlighting a set of scores for Johns Hopkins, illustrates this type of grouping. As an alternative to rating it against a full, nationwide list of 3,720 hospitals (in which it lands in the 37th percentile), Adelman’s system makes it possible to rate Johns Hopkins among a narrower grouping of 138 peer institutions—all teaching hospitals with at least 400 beds—in which it stands in the 69th percentile. (Search the full Efficient Frontier database.)