D o hospitals experience safety tipping points as utilization increases, and if so, what are the implications for hospital operations management? We argue that safety tipping points occur when managerial escalation policies are exhausted and workload variability buffers are depleted. Front-line clinical staff is forced to ration resources and, at the same time, becomes more error prone as a result of elevated stress hormone levels. We confirm the existence of safety tipping points for in-hospital mortality using the discharge records of 82,280 patients across six high-mortality-risk conditions from 256 clinical departments of 83 German hospitals. Focusing on survival during the first seven days following admission, we estimate a mortality tipping point at an occupancy level of 92.5%. Among the 17% of patients in our sample who experienced occupancy above the tipping point during the first seven days of their hospital stay, high occupancy accounted for one in seven deaths. The existence of a safety tipping point has important implications for hospital management. First, flexible capacity expansion is more cost-effective for safety improvement than rigid capacity, because it will only be used when occupancy reaches the tipping point. In the context of our sample, flexible staffing saves more than 40% of the cost of a fully staffed capacity expansion, while achieving the same reduction in mortality. Second, reducing the variability of demand by pooling capacity in hospital clusters can greatly increase safety in a hospital system, because it reduces the likelihood that a patient will experience occupancy levels beyond the tipping point. Pooling the capacity of nearby hospitals in our sample reduces the number of deaths due to high occupancy by 34%.

Objective. To examine the causal effect of a hospital's experience with treating hip fractures (volume) on patient treatment outcomes. Data Sources. We use a full sample of administrative data from German hospitals for 2007. The data provide detailed information on patients and hospitals. We also reference the hospitals' addresses and the zip codes of patients' place of residence. Study Design. We apply an instrumental variable approach to address endogeneity concerns due to reverse causality and unobserved patient heterogeneity. As instruments for case volume, we use the number of potential patients and number of other hospitals in the region surrounding each hospital. Principal Findings. Our results indicate that after applying an instrumental variables (IV) regression of volume on outcome, volume significantly increases quality. Conclusions. We provide evidence for the practice-makes-perfect hypothesis by showing that volume is a driving factor for quality. Key Words. Volume, hospital quality, mortality, instrumental variables Quality of (hospital) care is the result of interaction between many factors. It reflects, for example, the care provided by physicians, nurses, and other hospital staff. At the same time, it reflects the implementation of and adherence to treatment standards. It can also indicate the effective and efficient usage of specialist technical equipment (Mainz 2003). The case volume of a hospital is often used as a proxy for the mentioned structure and processes of care with the assumption of a positive correlation (Halm, Lee, and Chassin 2002). Hence, it is an indirect measure of quality and related to the interaction of several factors.Luft, Bunker, and Enthoven (1979) showed in their seminal paper that there is a correlation between volume and outcome quality in 10 of 12 procedures; that is, a higher case volume is associated with better outcomes. This correlation has been referred to as the volume-outcome relationship. The studies that followed have predominantly confirmed this correlation (Halm,

For decades, there is an ongoing discussion about the quality of hospital care leading i.a. to the introduction of minimum volume standards in various countries. In this paper, we analyze the volume-outcome relationship for patients with intact abdominal aortic aneurysm and hip fracture. We define hypothetical minimum volume standards in both conditions and assess consequences for access to hospital services in Germany. The results show clearly that patients treated in hospitals with a higher case volume have on average a significant lower probability of death in both conditions. Furthermore, we show that the hypothetical minimum volume standards do not compromise overall access measured with changes in travel times.

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