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Heterogeneity in Hospitals' Responses to a Financial Reform: A Random Coefficient Analysis of The Impact of Activity-Based Financing on Efficiency

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  • Biorn, Erik
  • Hagen, Terje P.
  • Iversen, Tor
  • Magnussen, Jon

Abstract

The paper examines the heterogeneity with respect to the impact of a financial reform - Activity Based Financing (ABF) - on hospital efficiency in Norway. Measures of technical efficiency and of cost-efficiency are considered. The data set is from a contiguous ten-year panel of 47 hospitals covering both pre-ABF years and years after its imposition. Substantial heterogeneity in the responses, as measured by both estimated and predicted coefficients, is found. Rank correlations between the estimated/predicted coefficients of the ABF dummy and the pre-ABF/post-ABF efficiencies are examined. Overall, improvement seems to be more pronounced in technical efficiency than in cost-efficiency.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8169.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:8169

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Keywords: Health Econometrics; Panel Data; Hospital Efficiency; Activity-Based Financing; Random Coefficients; Heterogeneity; Rank Correlation;

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References

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  1. Ole Olesen & Niels Petersen, 2002. "The Use of Data Envelopment Analysis with Probabilistic Assurance Regions for Measuring Hospital Efficiency," Journal of Productivity Analysis, Springer, Springer, vol. 17(1), pages 83-109, January.
  2. Lancaster, Tony, 2000. "The incidental parameter problem since 1948," Journal of Econometrics, Elsevier, Elsevier, vol. 95(2), pages 391-413, April.
  3. Mark Duggan, 2002. "Hospital Market Structure and the Behavior of Not-For-Profit Hospitals," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 433-446, Autumn.
  4. Erik Biørn & Kjersti-Gro Lindquist & Terje Skjerpen, 2000. "Heterogeneity in Returns to Scale: A Random Coefficient Analysis with Unbalanced Panel Data," Discussion Papers, Research Department of Statistics Norway 292, Research Department of Statistics Norway.
  5. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, Elsevier, vol. 19(1), pages 150-162, October.
  6. Brigitte Dormont & Carine Milcent, 2002. "Quelle régulation pour les hôpitaux publics français ?," Revue Française d'Économie, Programme National Persée, vol. 17(2), pages 117-142.
  7. Newhouse, Joseph P. & Byrne, Daniel J., 1988. "Did Medicare's Prospective Payment System cause length of stay to fall?," Journal of Health Economics, Elsevier, Elsevier, vol. 7(4), pages 413-416, December.
  8. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, INFORMS, vol. 30(9), pages 1078-1092, September.
  9. Biorn, Erik & Hagen, Terje P. & Iversen, Tor & Magnussen, Jon, 2002. "The Effect of Activity-Based Financing on Hospital Efficiency: A Panel Data Analysis of DEA Efficiency Scores 1992-2000," MPRA Paper 8099, University Library of Munich, Germany.
  10. Erik BIORN & Kjerti-Gro LINDQUIST & Terje SKJERPEN, 2003. "Random Coefficients in Unbalanced Panels: An Application on Data from Chemical Plants," Annales d'Economie et de Statistique, ENSAE, issue 69, pages 55-83.
  11. Chalkley, M. & Malcomson, J.M., 1995. "Contracting for health services when patient demand does not reflect quality," Discussion Paper Series In Economics And Econometrics 9514, Economics Division, School of Social Sciences, University of Southampton.
  12. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, Elsevier, vol. 2(6), pages 429-444, November.
  13. Guillem López-Casasnovas & Marc Saez, 1999. "The impact of teaching status on average costs in Spanish hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 641-651.
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Cited by:
  1. Di Giorgio, Laura & Filippini, Massimo & Masiero, Giuliano, 2014. "Implications of global budget payment system on nursing home costs," Health Policy, Elsevier, Elsevier, vol. 115(2), pages 237-248.
  2. Philippe K. Widmer, 2011. "Does prospective payment increase hospital (in)efficiency? Evidence from the Swiss hospital sector," ECON - Working Papers, Department of Economics - University of Zurich 053, Department of Economics - University of Zurich.

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