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Performance‐based budgeting in the public sector: an illustration from the VA health care system

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  • Suthathip Yaisawarng
  • James F. Burgess

Abstract

This paper estimates frontier cost functions for US Department of Veterans Affairs (VA) hospitals in FY2000 that are consistent with economic theory and explicitly account for cost differences across patients' risk, level of access to care, quality of care, and hospital‐specific characteristics. Results indicate that on average VA hospitals in FY2000 operate at efficiency levels of 94%, as compared to previous studies on US private sector hospitals that average closer to 90% efficient. Using these cost frontiers, management systems potentially could be implemented to enhance the equitable allocation of the VA medical care global budget and systematically distribute funds across hospitals and networks. The paper also provides recommendations to improve the efficiency of delivering health care services applicable to public sector organizations. Copyright © 2005 John Wiley & Sons, Ltd.

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  • Suthathip Yaisawarng & James F. Burgess, 2006. "Performance‐based budgeting in the public sector: an illustration from the VA health care system," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 295-310, March.
    • Handle: RePEc:wly:hlthec:v:15:y:2006:i:3:p:295-310
    DOI: 10.1002/hec.1060
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    1. Tom Stargardt & Jonas Schreyögg & Ivan Kondofersky, 2014. "Measuring The Relationship Between Costs And Outcomes: The Example Of Acute Myocardial Infarction In German Hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 23(6), pages 653-669, June.
    2. Sonali Das & Ming‐Hui Chen & Nicholas Warren & Michael Hodgson, 2011. "Do associations between employee self‐reported organizational assessments and attitudinal outcomes change over time? An analysis of four Veterans Health Administration surveys using structural equatio," Health Economics, John Wiley & Sons, Ltd., vol. 20(12), pages 1507-1522, December.
    3. Kathleen Carey & Theodore Stefos, 2011. "Controlling for quality in the hospital cost function," Health Care Management Science, Springer, vol. 14(2), pages 125-134, June.
    4. Kathleen Carey & Jean M. Mitchell, 2018. "Specialization and production cost efficiency: evidence from ambulatory surgery centers," International Journal of Health Economics and Management, Springer, vol. 18(1), pages 83-98, March.
    5. Bruce Hollingsworth, 2008. "The measurement of efficiency and productivity of health care delivery," Health Economics, John Wiley & Sons, Ltd., vol. 17(10), pages 1107-1128, October.
    6. Productivity Commission, 2009. "Public and Private Hospitals," Research Reports, Productivity Commission, Government of Australia, number 37.
    7. Laura Haas & Tom Stargardt & Jonas Schreyoegg, 2012. "Cost-effectiveness of open versus laparoscopic appendectomy: a multilevel approach with propensity score matching," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(5), pages 549-560, October.
    8. Jonas Schreyögg & Tom Stargardt & Oliver Tiemann, 2011. "Costs and quality of hospitals in different health care systems: a multi‐level approach with propensity score matching," Health Economics, John Wiley & Sons, Ltd., vol. 20(1), pages 85-100, January.

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