Internal Markets and Health Care Efficiency: A Multiple-Output Stochastic Frontier Analysis
AbstractThis paper has two purposes. The first purpose is methodological and aims to extend previous work on efficiency analysis by implementing a multiple-output stochastic ray frontier production function model. This model generalizes the single-output stochastic frontier model to multiple-input, multiple-output technologies and allows simultaneous estimation of technical efficiency and analysis of influential variables on efficiency. The second, empirical purpose, is to test for existence and magnitude of the effect of purchaser/provider split combined with new reimbursement schemes on technical efficiency in the Swedish public hospital system. The analysis is carried out with a panel data set covering the total population of 26 Swedish County Councils from 1989 to 1995. Our empirical results support the frontier model specification and indicate that output-based reimbursement improves technical efficiency. The potential saving in costs due to a switch from budget-based allocation to output-based allocation is estimated to be almost 10%.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 222.
Length: 22 pages
Date of creation: 26 Feb 1998
Date of revision:
Publication status: Published in Health Economics, 1999, pages 151-164.
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Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
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Fax: +46-(0)8-31 01 57
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More information through EDIRC
Internal markets; stochastic ray frontier model; technical efficiency; panel data.;
Other versions of this item:
- U.-G. Gerdtham & M. Löthgren & M. Tambour & C. Rehnberg, 1999. "Internal markets and health care efficiency: a multiple-output stochastic frontier analysis," Health Economics, John Wiley & Sons, Ltd., vol. 8(2), pages 151-164.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- I10 - Health, Education, and Welfare - - Health - - - General
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