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An international comparison of hospital efficiency: does institutional environment matter?

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  • Lee Rivers Mobley
  • Jon Magnussen
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    Abstract

    The consensus among many health economists is that no meaningful performance differences exist among for-profit and non-profit hospitals in the US, but this topic has continued to be a matter of academic, judicial, and public policy interest. A similar debate has ensued internationally, regarding the potential efficiency gains from privatization of public enterprises. In this paper, we examine empirical evidence from the public, highly regulated Norwegian hospital sector and the private, highly competitive and unregulated California hospital sector to ascertain whether institutional environment and level of market competition significantly affect the degree of productive efficiency in hospitals. We compare and discuss the productive efficiency of four similar sets of hospitals operating in different institutional and competitive environments. The four samples are carefully matched in the dimensions of sample size, hospital size, and average lengths of stay. Heterogeneity in output definition is used to control for other dimensions (casemix, age distribution of patients). We use Data Envelopment Analysis (DEA) to estimate and compare average long-run as well as short-run efficiency measures across groups. We find that scale and scope regulation of Norwegian hospitals improves long-run efficiency, primarily due to better utilization of capital.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 30 (1998)
    Issue (Month): 8 ()
    Pages: 1089-1100

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    Handle: RePEc:taf:applec:v:30:y:1998:i:8:p:1089-1100

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    Cited by:
    1. Reinhard Busse & Jonas Schreyögg & Peter C. Smith, 2008. "Variability in healthcare treatment costs amongst nine EU countries - results from the Health BASKET project," Health Economics, John Wiley & Sons, Ltd., vol. 17(S1), pages S1-S8.
    2. Björn A. Kuchinke & Ansgar Wübker, 2009. "Defizite von öffentlichen Allgemeinkrankenhäusern in Deutschland: Empirische Befunde von 1998 bis 2004 und wirtschaftspolitische Implikationen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(3), pages 290-308, 08.
    3. Guilhermina Rego & Rui Nunes & José Costa, 2010. "The challenge of corporatisation: the experience of Portuguese public hospitals," The European Journal of Health Economics, Springer, vol. 11(4), pages 367-381, August.
    4. Linna, Miika & Hakkinen, Unto & Magnussen, Jon, 2006. "Comparing hospital cost efficiency between Norway and Finland," Health Policy, Elsevier, vol. 77(3), pages 268-278, August.
    5. Varabyova, Yauheniya & Schreyögg, Jonas, 2013. "International comparisons of the technical efficiency of the hospital sector: Panel data analysis of OECD countries using parametric and non-parametric approaches," Health Policy, Elsevier, vol. 112(1), pages 70-79.
    6. Emma Medin & Kjartan Anthun & Unto Häkkinen & Sverre Kittelsen & Miika Linna & Jon Magnussen & Kim Olsen & Clas Rehnberg, 2011. "Cost efficiency of university hospitals in the Nordic countries: a cross-country analysis," The European Journal of Health Economics, Springer, vol. 12(6), pages 509-519, December.
    7. Andrew Worthington, 1999. "An Empirical Survey Of Frontier Efficiency Measurement Techniques In Healthcare Services," School of Economics and Finance Discussion Papers and Working Papers Series 067, School of Economics and Finance, Queensland University of Technology.
    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. Jonas Schreyögg & Oliver Tiemann & Tom Stargardt & Reinhard Busse, 2008. "Cross-country comparisons of costs: the use of episode-specific transitive purchasing power parities with standardised cost categories," Health Economics, John Wiley & Sons, Ltd., vol. 17(S1), pages S95-S103.

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