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Medicaid, Hospital Financial Stress, and the Incidence of Adverse Medical Events for Children


Address correspondence to Richard B. Smith, Ph.D., College of Business, University of South Florida St. Petersburg, 140 Seventh Avenue South, COB 348, St. Petersburg, FL 33701; e-mail:



To assess the association between Medicaid-induced financial stress of a hospital and the probability of an adverse medical event for a pediatric discharge.

Data Sources

Secondary data from the Nationwide Inpatient Sample, Agency for Healthcare Research and Quality's Healthcare Cost and Utilization Project, and the American Hospital Association's Annual Survey of Hospitals. Study examines 985,896 pediatric discharges (children age 0–17), from 1,050 community hospitals in 26 states (representing 63 percent of the U.S. Medicaid population) between 2005 and 2007.

Study Design

We estimate the probability of an adverse event, controlling for patient, hospital, and state characteristics, using an aggregated, composite measure to overcome rarity of individual events.

Principal Findings

Children in hospitals with relatively high proportions of pediatric discharges that are more reliant on Medicaid reimbursement are more likely than children in other hospitals (odds ratio = 1.62) to experience an adverse event. Medicaid pediatric inpatients are more likely than privately insured patients (odds ratio = 1.10) to experience an adverse event.


Hospital reliance on comparatively low Medicaid reimbursement may contribute to the problem of adverse medical events for hospitalized children. Policies to reduce adverse events should account for differences in underlying, contributing factors of these events.