Answer:
Some members could be alarmed but it doesn't necessarily mean that Community Hospital has lower-quality care than Middle Hospital and University Hospital. It is important to identify that this alarm could also come from the increased economic pressure on hospitals.
R.W. Dubois, R.H. Brook and W.H. Rogers (1987) have studied the death rate index as a potential screen for quality of medical care since the 80s. In their article, they state that hospital with higher death rates "may provide inadequate quality of care or have uniquely ills patient populations." This would lead the Quality Task Force to explore and define the ills patient population of the Community Hospital.
Mary E.Goss and Joseph I. Reed (1974) explore the quality evaluating practices of hospital care through severity-adjusted death rates in the 70s. Their analysis suggested that differences in technological adequacy, control status and teaching status of the hospitals partially support the validity of death rate as a quality index; but "the index is too dependent of the local population".
Therefore a population characterization must be necessary to bring up in this discussion as a cohort study. Goss and Reed also stated that the death rate "may be more productive in the long run". This means that the death rate would be better estimated in a longitudinal study as a quality care index.
References:
Dubois, R. W., Brook, R. H., & Rogers, W. H. (1987). Adjusted hospital death rates: a potential screen for quality of medical care. American journal of public health, 77(9), 1162–1166. doi:10.2105/ajph.77.9.1162
Mary E. W. Goss and Joseph I. Reed, Medical Care, Vol. 12, No. 3 (Mar., 1974), pp. 202-213