If hospital reduces costs but outcomes worsen, what happens to value?

• A. Value stays the same
• B. Value increases
• C. Value decreases
• D. Value becomes undefined

Answer: (A)

Value in health care is defined as the health outcomes achieved per dollar spent. When costs are reduced but outcomes worsen, the overall value depends on how much outcomes change relative to the cost reduction. If the drop in outcomes exactly offsets the savings from spending less, the ratio stays the same, so value remains unchanged. In this framing, the question implies that the proportional changes balance out, leading to value staying the same. If the outcomes declined more than the cost savings, value would fall; if they declined less, value would rise.