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Comparing the allocative efficiencies of hospitals

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  • Morey, RC
  • Fine, DJ
  • Loree, SW

Abstract

A new technique for comparing the performance of firms in controlling costs is introduced and applied to a sample of 60 hospitals. The multi-output, multi-input approach utilizes observed costs, process counts and non-controllable factors for a sample of hospitals to form peer groups to build allocative cost frontiers. The approach can be used to provide insights regarding conjectures about the relative efficiencies of various institutional types as well as the cost differentials associated with different levels of quality of care. The programming approach handles environmental factors such as case mix severity, the teaching mission of the institution, etc. Our illustrative results found an average of a 14% differential in the efficient cost between public and not-for-profits. Much better data is needed before any definitive findings can be stated, but the type of insights regarding the varying degree of separation of the cost frontiers for different levels of outputs is concretely illustrated.

Suggested Citation

  • Morey, RC & Fine, DJ & Loree, SW, 1990. "Comparing the allocative efficiencies of hospitals," Omega, Elsevier, vol. 18(1), pages 71-83.
    • Handle: RePEc:eee:jomega:v:18:y:1990:i:1:p:71-83
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    Citations

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    Cited by:

    1. Thomas Czypionka & Markus Kraus & Susanne Mayer & Gerald Röhrling, 2014. "Efficiency, ownership, and financing of hospitals: The case of Austria," Health Care Management Science, Springer, vol. 17(4), pages 331-347, December.
    2. N. Maniadakis & N. Kotsopoulos & P. Prezerakos & J. Yfantopoulos, 2009. "Health Care Services Performance Measurement: Theory, Methods and Empirical Evidence," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 151-170.
    3. Puig-Junoy, Jaume, 2000. "Partitioning input cost efficiency into its allocative and technical components: an empirical DEA application to hospitals," Socio-Economic Planning Sciences, Elsevier, vol. 34(3), pages 199-218, September.
    4. Gema Gutierrez-Romero & Antonio Blanco-Oliver & Mª Teresa Montero-Romero & Mariano Carbonero-Ruz, 2021. "The Impact of CEOs’ Gender on Organisational Efficiency in the Public Sector: Evidence from the English NHS," Sustainability, MDPI, vol. 13(4), pages 1-15, February.
    5. Dinesh R. Pai & Fatma Pakdil & Nasibeh Azadeh-Fard, 2024. "Applications of data envelopment analysis in acute care hospitals: a systematic literature review, 1984–2022," Health Care Management Science, Springer, vol. 27(2), pages 284-312, June.
    6. Sahoo, Biresh K. & Luptacik, Mikulas & Mahlberg, Bernhard, 2011. "Alternative measures of environmental technology structure in DEA: An application," European Journal of Operational Research, Elsevier, vol. 215(3), pages 750-762, December.
    7. García Prieto, C., 2003. "La ineficiencia en costes de los hospitales del Insalud:un estudio detallado / Cost inefficiency in spanish public hospitals: A detailled stydy," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 21, pages 467-484, December.
    8. O'Neill, Liam & Rauner, Marion & Heidenberger, Kurt & Kraus, Markus, 2008. "A cross-national comparison and taxonomy of DEA-based hospital efficiency studies," Socio-Economic Planning Sciences, Elsevier, vol. 42(3), pages 158-189, September.
    9. Ozcan, Yasar A., 1995. "Efficiency of hospital service production in local markets: The balance sheet of U.S. medical armament," Socio-Economic Planning Sciences, Elsevier, vol. 29(2), pages 139-150, June.
    10. Giokas, Dimitris I., 2001. "Greek hospitals: how well their resources are used," Omega, Elsevier, vol. 29(1), pages 73-83, February.
    11. Beatriz Gonzalez Lopez-Valcarcel & Patricia Barber Perez, 1996. "Changes in the efficiency of spanish public hospitals after the introduction of program-contracts," Investigaciones Economicas, Fundación SEPI, vol. 20(3), pages 377-402, September.
    12. , Aisdl, 2021. "The Impact of CEOs’ Gender on Organisational Efficiency in the Public Sector: Evidence from the English NHS," OSF Preprints mhcxv, Center for Open Science.
    13. Barros, Carlos Pestana & Menezes, Antonio & Vieira, José António Cabral & Peypoch, Nicolas & Solonandrasana, Bernardin, 2007. "An Analysis of Hospital Efficiency and Productivity Growth Using the Luenberger Productivity Indicator," IZA Discussion Papers 2689, Institute of Labor Economics (IZA).

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