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The impact of internal markets on health care efficiency: evidence from health care reforms in Sweden

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  • U. -G. Gerdtham
  • C. Rehnberg
  • M. Tambour

Abstract

A purchaser/provider split together with output-based reimbursement were recently introduced by several Swedish county councils. These changes have been motivated by arguments of efficiency and consumer choice. This paper tests the null hypothesis that hospital services are provided as efficiently by county councils with internal markets and output-based reimbursement as by county councils with budget reimbursement. We first estimate technical efficiency using data envelopment analysis and then we regress the efficiency scores as the dependent variable on new internal organizations in a multiple regression by use of pooled cross-section data for the 26 county councils for two years (1993 and 1994). The results reject our null hypothesis and we conclude that the organizational changes in the county councils improve health care efficiency. Our results further indicate that the potential savings in costs due to a hypothetical switch from budget based allocation to an output based allocation is about 13%. We also found some evidence indicating that county councils with a nonsocialist political majority are relatively more efficient than those with a socialist regime and that large county councils are more efficient than small county councils.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/000368499323652
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Bibliographic Info

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

Volume (Year): 31 (1999)
Issue (Month): 8 ()
Pages: 935-945

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Handle: RePEc:taf:applec:v:31:y:1999:i:8:p:935-945

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References

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  1. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
  2. Borden, James P., 1988. "An assessment of the impact of diagnosis-related group (DRG)-based reimbursement on the technical efficiency of New Jersey hospitals using data envelopment analysis," Journal of Accounting and Public Policy, Elsevier, vol. 7(2), pages 77-96.
  3. Per Andersen & Niels Christian Petersen, 1993. "A Procedure for Ranking Efficient Units in Data Envelopment Analysis," Management Science, INFORMS, vol. 39(10), pages 1261-1264, October.
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Cited by:
  1. Biørn, Erik & Hagen, Terje P. & Iversen, Tor & Magnussen, Jon, 2009. "The effect of activity-based financing on hospital efficiency: A panel data analysis of DEA efficiency scores 1992-2000," HERO On line Working Paper Series 2002:8, Oslo University, Health Economics Research Programme.
  2. Pablo Gottret & George Schieber, 2006. "Health Financing Revisited : A Practitioner's Guide," World Bank Publications, The World Bank, number 7094, October.
  3. Hamada, Hironori & Sekimoto, Miho & Imanaka, Yuichi, 2012. "Effects of the per diem prospective payment system with DRG-like grouping system (DPC/PDPS) on resource usage and healthcare quality in Japan," Health Policy, Elsevier, vol. 107(2), pages 194-201.
  4. Magnussen, Jon & Nyland, Kari, 2008. "Measuring efficiency in clinical departments," Health Policy, Elsevier, vol. 87(1), pages 1-7, July.
  5. Moreno-Serra, Rodrigo & Wagstaff, Adam, 2010. "System-wide impacts of hospital payment reforms: Evidence from Central and Eastern Europe and Central Asia," Journal of Health Economics, Elsevier, vol. 29(4), pages 585-602, July.

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