A robust analysis of hospital efficiency and factors affecting variability.

The objectives of this paper are to use data envelopment analysis to measure hospital inefficiency in a way that accounts for patient outcomes and to study the association between organizational factors, such as hospital-physicians integration level and teaching status, and market competition with hospital inefficiency. We apply the robust data envelopment analysis approach to a sample of private (both not-for-profit and for-profit) hospitals operating in the United States. Our data envelopment analysis model includes mortality and readmission rates as bad outputs and admissions, surgeries, emergency room, and other visits as good outputs. Therefore, our measurement of hospital inefficiency accounts for quality. We then use a subsampling regression analysis to determine the predictors of hospital inefficiency. For-profit, fully integrated and teaching hospitals were more efficient than their counterparts. Also hospitals located in more competitive markets were more efficient than those located in less competitive markets. Incorporating quality in the measurement of hospital efficiency is key for producing valid efficiency scores. Hospitals in less competitive markets need to improve their efficiency levels. Moreover, high levels of hospital physician integration might be instrumental in ensuring that hospitals achieve their efficiency goals.

Measuring the Capacity Utilization of Public District Hospitals in Tunisia: Using Dual Data Envelopment Analysis Approach.

BACKGROUND: Public district hospitals (PDHs) in Tunisia are not operating at full plant capacity and underutilize their operating budget. METHODS: Individual PDHs capacity utilization (CU) is measured for 2000 and 2010 using dual data envelopment analysis (DEA) approach with shadow prices input and output restrictions. The CU is estimated for 101 of 105 PDH in 2000 and 94 of 105 PDH in 2010. RESULTS: In average, unused capacity is estimated at 18% in 2010 vs. 13% in 2000. Of PDHs 26% underutilize their operating budget in 2010 vs. 21% in 2000. CONCLUSION: Inadequate supply, health quality and the lack of operating budget should be tackled to reduce unmet user's needs and the bypassing of the PDHs and, thus to increase their CU. Social health insurance should be turned into a direct purchaser of curative and preventive care for the PDHs.

Assessing overall, technical, and scale efficiency among home health care agencies.

While home health care agencies (HHAs) play a vital role in the production of health, little research has been performed gauging their efficiency. Employing a robust approach to data envelopment analysis (DEA) we assessed overall, technical, and scale efficiency on a nationwide sample of HHAs. After deriving the three efficiency measures, we regressed these scores on a variety of environmental factors. We found that HHAs, on average, could proportionally reduce inputs by 28 % (overall efficiency), 23 % (technical efficiency) and 6 % (scale efficiency). For-profit ownership was positively associated with improvements in overall efficiency and technical efficiency and chain ownership was positively associated with global efficiency. There were also state-by-state variations on all the efficiency measures. As home health becomes an increasingly important player in the health care system, and its share of national health expenditures increases, it has become important to understand the cost structure of the industry and the potential for efficiencies. Therefore, further research is recommended as this sector continues to grow.

Finding the right compromise between productivity and environmental efficiency on high input tropical dairy farms: a case study.

This study focused on the trade-off between milk production and its environmental impact on greenhouse gas (GHG) emissions and nitrogen surplus in a high input tropical system. We first identified the objectives of the three main stakeholders in the dairy sector (farmers, a milk cooperative and environmentalists). The main aim of the farmers and cooperative's scenarios was to increase milk production without additional environmental deterioration but with the possibility of increasing the inputs for the cooperative. The environmentalist's objective was to reduce environmental deterioration. Second, we designed a sustainable intensification scenario combining maximization of milk production and minimization of environmental impacts. Third, the objectives for reducing the eco-inefficiency of dairy systems in Reunion Island were incorporated in a framework for activity analysis, which was used to model a technological approach with desirable and undesirable outputs. Of the four scenarios, the sustainable intensification scenario produced the best results, with a potential decrease of 238 g CO2-e per liter of milk (i.e. a reduction of 13.93% compared to the current level) and a potential 7.72 L increase in milk produced for each kg of nitrogen surplus (i.e. an increase of 16.45% compared to the current level). These results were based on the best practices observed in Reunion Island and optimized manure management, crop-livestock interactions, and production processes. Our results also showed that frontier efficiency analysis can shed new light on the challenge of developing sustainable intensification in high input tropical dairy systems.

Renovating Charity Hospital or building a new hospital in post-Katrina New Orleans: economic rationale versus political will.

Since September 2005, Charity Hospital of New Orleans has been closed due to Hurricane Katrina. A debate following the closing arose about whether this public hospital should be renovated or a new medical center affiliated with the Louisiana State University should be built. Using academic literature, government statistics, and popular press reports, we describe the economic implications that support the view that Charity Hospital should have been renovated. We also address why this policy was not pursued by demonstrating the influence politics and individual stakeholders (specifically, Louisiana State University) had on the eventual policy pursued. In this commentary we also note the political identity movement away from public-sector provision of services to private-sector interests.

Hospital's activity-based financing system and manager-physician [corrected] interaction.

This paper examines the consequences of the introduction of an activity-based reimbursement system on the behavior of physicians and hospital's managers. We consider a private for-profit sector where both hospitals and physicians are initially paid on a fee-for-service basis. We show that the benefit of the introduction of an activity-based system depends on the type of interaction between managers and physicians (simultaneous or sequential decision-making games). It is shown that, under the activity-based system, a sequential interaction with physician leader could be beneficial for both agents in the private sector. We further model an endogenous timing game à la Hamilton and Slutsky (Games Econ Behav 2: 29-46, 1990) in which the type of interaction is determined endogenously. We show that, under the activity-based system, the sequential interaction with physician leader is the unique subgame perfect equilibrium.

The impact of CON regulation on hospital efficiency.

In this paper we propose an empirically implementable measure of aggregate-level efficiency along the lines of Debreu's (1951) coefficient of resource utilization but restricted to the production side. The efficiency measure is based on directional distance functions, which allows the overall measure of efficiency to be decomposed into measures of technical and "structural" efficiency. The latter measure, which captures inefficiencies associated with the organization of production within an industry, is further decomposed into measures of scale and mix efficiency. The measures developed in the paper are illustrated using U.S. hospital data. The illustration sheds light on the efficacy of certificate of need (CON) regulations.

The optimality of hospital financing system: the role of physician-manager interactions.

The ability of a prospective payment system to ensure an optimal level of both quality and cost reducing activities in the hospital industry has been stressed by Ma (Ma, J Econ Manage Strategy 8(2):93-112, 1994) whose analysis assumes that decisions about quality and costs are made by a single agent. This paper examines whether this result holds when the main decisions made within the hospital are shared between physicians (quality of treatment) and hospital managers (cost reduction). Ma's conclusions appear to be relevant in the US context (where the hospital managers pay the whole cost of treatment). Nonetheless, when physicians partly reimburse hospitals for the treatment cost as it is the case in many European countries, we show that the ability of a prospective payment system to achieve both objectives is sensitive to the type of interaction (simultaneous, sequential or joint decision-making) between the agents. Our analysis suggests that regulation policies in the hospital sector should not be exclusively focused on the financing system but should also take the interaction between physicians and hospital managers into account.