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The Use of Data Envelopment Analysis with Probabilistic Assurance Regions for Measuring Hospital Efficiency

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  • Ole Olesen
  • Niels Petersen

Abstract

This paper uses Data Envelopment Analysis (DEA) for an estimation of the cost efficiency of 70 Danish hospitals. The analysis relates to a cost function based on 483 outputs in combination with a set of probabilistic assurance regions defined by the cost distributions for each output. It is demonstrated that the probabilistic assurance region approach allows for (i) a frontier estimation in the full output space, i.e., no fixed aggregation is required, and (ii) a controlling of the variation in heterogeneity of the output clusters, in casu Diagnosis Related Groups. The likelihood of the estimated efficiency score for a given hospital can be measured based on the sensitivity of the score w.r.t. the probability levels used in the specification of confidence intervals for the probabilistic assurance regions. Copyright Kluwer Academic Publishers 2002

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  • Ole Olesen & Niels Petersen, 2002. "The Use of Data Envelopment Analysis with Probabilistic Assurance Regions for Measuring Hospital Efficiency," Journal of Productivity Analysis, Springer, vol. 17(1), pages 83-109, January.
    • Handle: RePEc:kap:jproda:v:17:y:2002:i:1:p:83-109
    DOI: 10.1023/A:1013536404737
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    1. Jacques Ngoie Kibambe & Steven F. Koch, 2005. "DEA Applied to a Gauteng Sample of South African Public Hospitals," Working Papers 200512, University of Pretoria, Department of Economics.
    2. Nan Jiang & Antony Andrews, 2020. "Efficiency of New Zealand’s District Health Boards at Providing Hospital Services: A stochastic frontier analysis," Journal of Productivity Analysis, Springer, vol. 53(1), pages 53-68, February.
    3. Ludwig Kuntz & Stefan Scholtes & Antonio Vera, 2007. "Incorporating efficiency in hospital-capacity planning in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 8(3), pages 213-223, September.
    4. Biorn, Erik & Hagen, Terje P. & Iversen, Tor & Magnussen, Jon, 2006. "Heterogeneity in Hospitals' Responses to a Financial Reform: A Random Coefficient Analysis of The Impact of Activity-Based Financing on Efficiency," MPRA Paper 8169, University Library of Munich, Germany.
    5. Gary D. Ferrier, 2014. "Improving the "usefulness" of stochastic frontier analysis for health care," Economics and Business Letters, Oviedo University Press, vol. 3(1), pages 27-34.
    6. Mitropoulos, Panagiotis & Talias, Μichael A. & Mitropoulos, Ioannis, 2015. "Combining stochastic DEA with Bayesian analysis to obtain statistical properties of the efficiency scores: An application to Greek public hospitals," European Journal of Operational Research, Elsevier, vol. 243(1), pages 302-311.
    7. İlgün, Gülnur & Sönmez, Seda & Konca, Murat & Yetim, Birol, 2022. "Measuring the efficiency of Turkish maternal and child health hospitals: A two-stage data envelopment analysis," Evaluation and Program Planning, Elsevier, vol. 91(C).
    8. Tsionas, Efthymios G. & Papadakis, Emmanuel N., 2010. "A Bayesian approach to statistical inference in stochastic DEA," Omega, Elsevier, vol. 38(5), pages 309-314, October.
    9. Camanho, Ana Santos & Silva, Maria Conceicao & Piran, Fabio Sartori & Lacerda, Daniel Pacheco, 2024. "A literature review of economic efficiency assessments using Data Envelopment Analysis," European Journal of Operational Research, Elsevier, vol. 315(1), pages 1-18.
    10. Paul Rouse & Robert Swales, 2006. "Pricing public health care services using DEA: Methodology versus politics," Annals of Operations Research, Springer, vol. 145(1), pages 265-280, July.
    11. Claudio Detotto & Manuela Pulina & Juan Brida, 2014. "Assessing the productivity of the Italian hospitality sector: a post-WDEA pooled-truncated and spatial analysis," Journal of Productivity Analysis, Springer, vol. 42(2), pages 103-121, October.
    12. 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.
    13. Gary Ferrier & Julie Trivitt, 2013. "Incorporating quality into the measurement of hospital efficiency: a double DEA approach," Journal of Productivity Analysis, Springer, vol. 40(3), pages 337-355, December.
    14. Khalili, M. & Camanho, A.S. & Portela, M.C.A.S. & Alirezaee, M.R., 2010. "The measurement of relative efficiency using data envelopment analysis with assurance regions that link inputs and outputs," European Journal of Operational Research, Elsevier, vol. 203(3), pages 761-770, June.
    15. Panagiotis Mitropoulos & Panagiotis D. Zervopoulos & Ioannis Mitropoulos, 2020. "Measuring performance in the presence of noisy data with targeted desirable levels: evidence from healthcare units," Annals of Operations Research, Springer, vol. 294(1), pages 537-566, November.
    16. Atici, Kazim Baris & Podinovski, Victor V., 2015. "Using data envelopment analysis for the assessment of technical efficiency of units with different specialisations: An application to agriculture," Omega, Elsevier, vol. 54(C), pages 72-83.
    17. James F. Burgess, 2012. "Productivity Analysis in Health Care," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 34, Edward Elgar Publishing.
    18. Antonio Vera & Ludwig Kuntz, 2007. "Prozessorientierte Organisation und Effizienz im Krankenhaus," Schmalenbach Journal of Business Research, Springer, vol. 59(2), pages 173-197, March.
    19. Eling, Martin & Jia, Ruo, 2019. "Efficiency and profitability in the global insurance industry," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).

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