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Measuring hospital cost efficiency with panel data models

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  • Miika Linna

Abstract

This paper investigated the development of hospital cost efficiency and productivity in Finland in 1988–1994 using a comparative application of parametric and non‐parametric panel models. Stochastic cost frontier models with a time‐varying inefficiency component were used as parametric methods. As non‐parametric methods various DEA models were employed to calculate efficiency scores and the Malmquist productivity index. The results revealed a 3–5% annual average increase in productivity, half of which was due to improvement in cost efficiency and half due to technological change. The results by parametric and non‐parametric methods compared well with respect to individual efficiency scores, time‐varying efficiency and technological change. The state subsidy reform of 1993 did not seem to have any observable effects on the hospital efficiency. © 1998 John Wiley & Sons, Ltd.

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  • Miika Linna, 1998. "Measuring hospital cost efficiency with panel data models," Health Economics, John Wiley & Sons, Ltd., vol. 7(5), pages 415-427, August.
    • Handle: RePEc:wly:hlthec:v:7:y:1998:i:5:p:415-427
    DOI: 10.1002/(SICI)1099-1050(199808)7:5<415::AID-HEC357>3.0.CO;2-9
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