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Hospital productivity and the Norwegian ownership reform – A Nordic comparative study

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  • Kittelsen, Sverre A.C.

    ()
    (Ragnar Frisch Centre for Economic Research)

  • Magnussen, Jon

    (Department of Public Health and Community Medicine)

  • Sarheim Anthun, Kjartan

    (SINTEF Health Research)

  • Häkkinen, Unto

    (Centre for Health Economics)

  • Linna, Miika

    (Centre for Health Economics)

  • Medin, Emma

    (Medical Management Centre)

  • Olsen, Kim Rose

    (Danish Institute for Health Services Research)

  • Rehnberg, Clas

    (Medical Management Centre)

Abstract

In a period where decentralisation seemed to be the prominent trend, Norway in 2002 chose to re-centralise the hospital sector. The reform had three main aims; cost control, efficiency and reduced waiting times. This study investigates whether the hospital reform has improved hospital productivity using the other four major Nordic countries as controls. Hospital productivity measures are obtained using data envelopment analysis (DEA) on a comparable dataset of 728 Nordic hospitals in the period 1999 to 2004. First a common reference frontier is established for the four countries, enveloping the technologies of each of the countries and years. Bootstrapping techniques are applied to the obtained productivity estimates to assess uncertainty and correct for bias. Second, these are regressed on a set of explanatory variables in order to separate the effect of the hospital reform from the effects of other structural, financial and organizational variables. A fixed hospital effect model is used, as random effects and OLS specifications are rejected. Robustness is examined through alternate model specifications, including stochastic frontier analysis (SFA). The SFA approach in performed using the Battese & Coelli (1995) one stage procedure where the inefficiency term is estimated as a function of the set of explanatory variables used in the second stage in the DEA approach. Results indicate that the hospital reform in Norway seems to have improved the level of productivity in the magnitude of approximately 4 % or more. While there are small or contradictory estimates of the effects of case mix and activity based financing, the length of stay is clearly negatively associated with estimated productivity. Results are robust to choice of efficiency estimation technique and various definition of when the reform effect takes place.

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Bibliographic Info

Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2008:10.

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Length: 25 pages
Date of creation: 02 Jun 2009
Date of revision:
Handle: RePEc:hhs:oslohe:2008_010

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Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
Phone: 2307 5309
Fax: 2307 5310
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Web page: http://www.hero.uio.no/eng.html
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Keywords: Efficiency; productivity; DEA; SFA; hospitals;

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Cited by:
  1. 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.
  2. Kittelsen, Sverre A.C. & Persson, Benny Adam & Rehnberg, Clas & Anthun, Kjartan S. & Goude, Fanny & Rättö, Hanna & Hope, Øyvind & Häkkinen, Unto & Medin, Emma & Kalseth, Birgitte & Kilsmark, Janni, 2014. "Decomposing the productivity differences between hospitals in the Nordic countries," HERO On line Working Paper Series 2013:4, Oslo University, Health Economics Research Programme.
  3. Miika Linna & Unto Häkkinen & Mikko Peltola & Jon Magnussen & Kjartan Anthun & Sverre Kittelsen & Annette Roed & Kim Olsen & Emma Medin & Clas Rehnberg, 2010. "Measuring cost efficiency in the Nordic Hospitals—a cross-sectional comparison of public hospitals in 2002," Health Care Management Science, Springer, vol. 13(4), pages 346-357, December.

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