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Relative performance evaluation of the English acute hospital sector

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  • Andrew Street
  • Rowena Jacobs

Abstract

Relative performance evaluation has been suggested as a means to overcome information asymmetry between regulators and organizations when assessing efficiency. By comparing similar organizations the relationship between costs and effort can be better isolated. The English Department of Health (DoH) has undertaken relative performance evaluation in comparing the unit costs of acute hospitals using ordinary least squares (OLS) methods. After adjusting for exogenous influences in costs, residual unexplained cost differences are deemed to represent inefficiency. This paper questions the official interpretation of the OLS residuals. The OLS model is re-estimated to calculate confidence intervals around the residuals and as a stochastic cost frontier (SCF). It is concluded that English acute hospitals exhibit less in efficiency than is implied by official estimates.

Suggested Citation

  • Andrew Street & Rowena Jacobs, 2002. "Relative performance evaluation of the English acute hospital sector," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1109-1119.
    • Handle: RePEc:taf:applec:v:34:y:2002:i:9:p:1109-1119
    DOI: 10.1080/00036840110088100
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    Cited by:

    1. C. O’Donnell & K. Nguyen, 2013. "An econometric approach to estimating support prices and measures of productivity change in public hospitals," Journal of Productivity Analysis, Springer, vol. 40(3), pages 323-335, December.
    2. Carmen De-Pablos-Heredero & Carlos Fernández-Renedo & Jose-Amelio Medina-Merodio, 2015. "Technical Efficiency and Organ Transplant Performance: A Mixed-Method Approach," IJERPH, MDPI, vol. 12(5), pages 1-20, May.
    3. Lukas Kwietniewski & Jonas Schreyögg, 2018. "Efficiency of physician specialist groups," Health Care Management Science, Springer, vol. 21(3), pages 409-425, September.
    4. Mareike Heimeshoff & Jonas Schreyögg & Lukas Kwietniewski, 2014. "Cost and technical efficiency of physician practices: a stochastic frontier approach using panel data," Health Care Management Science, Springer, vol. 17(2), pages 150-161, June.
    5. Nurhafiza Md Hamzah & Kok Fong See, 2019. "Technical efficiency and its influencing factors in Malaysian hospital pharmacy services," Health Care Management Science, Springer, vol. 22(3), pages 462-474, September.
    6. Mike Smet, 2007. "Measuring performance in the presence of stochastic demand for hospital services: an analysis of Belgian general care hospitals," Journal of Productivity Analysis, Springer, vol. 27(1), pages 13-29, February.
    7. Kim-Huong Nguyen & Tim Coelli, 2009. "Quantifying the effects of modelling choices on hospital efficiency measures: A meta-regression analysis," CEPA Working Papers Series WP072009, School of Economics, University of Queensland, Australia.
    8. Lukas Kwietniewski & Jonas Schreyögg, 2018. "Profit efficiency of physician practices: a stochastic frontier approach using panel data," Health Care Management Science, Springer, vol. 21(1), pages 76-86, March.

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