Strategic opportunities in the oversight of the U.S. hospital accreditation system

Hospital accreditation and state certification are the means that the Centers for Medicare & Medicaid Services (CMS) employs to meet quality of care requirements for medical care reimbursement. Hospitals can choose to use either a national accrediting agency or a state certification inspection in order to receive Medicare payments. Approximately, 80% of hospitals choose the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). The purpose of this paper is to analyze and discuss improvements on the structure of the accreditation process in a Principal-Agent-Supervisor framework with a special emphasis on the oversight by the principal (CMS) of the supervisor (JCAHO).