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Cost-containment policies and hospital efficiency: evidence from a panel of Italian hospitals

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Abstract

The main objective of this article is to evaluate to which extent the set of national and regional cost control policies implemented in recent years in Italy have affected hospital activity. Our contribution is mainly empirical as we focus our attention on the impact that policies like hospital mergers and regional bailout plans had on inefficiency. We use a rich longitudinal sample of Italian hospitals over the period 1999-2007 and perform a Bayesian analysis of the random-effects stochastic frontier model proposed by Greene (2005), allowing for a one-step estimation of both production frontier parameters and inefficiency effects. Results show that hospital inefficiency has changed over time and that part of this change could be ascribed to the mentioned policies.

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File URL: ftp://www.ceistorvergata.it/repec/rpaper/RP228.pdf
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Bibliographic Info

Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 228.

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Length: 28 pages
Date of creation: 13 Apr 2012
Date of revision: 13 Apr 2012
Handle: RePEc:rtv:ceisrp:228

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
Phone: +390672595601
Fax: +39062020687
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Web page: http://www.ceistorvergata.it
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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web: http://www.ceistorvergata.it

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Keywords: Hospital efficiency; Stochastic frontiers; Bayesian inference; Policy evaluation;

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References

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  1. Koop, Gary & Osiewalski, Jacek & Steel, Mark F. J., 1997. "Bayesian efficiency analysis through individual effects: Hospital cost frontiers," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 77-105.
  2. Berta, Paolo & Callea, Giuditta & Martini, Gianmaria & Vittadini, Giorgio, 2010. "The effects of upcoding, cream skimming and readmissions on the Italian hospitals efficiency: A population-based investigation," Economic Modelling, Elsevier, vol. 27(4), pages 812-821, July.
  3. Medhi Farsi & Massimo Filippini, 2006. "Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 0606, USI Università della Svizzera italiana.
  4. Gian Paolo Barbetta & Gilberto Turati & Angelo Zago, 2004. "Behavioral Differences Between Public and Private Not-For-Profit Hospitals in the Italian National Health Service," Working Papers 12, University of Verona, Department of Economics.
  5. Propper, C & Laudicella, M & Gaynor, M, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Working Papers 9183, Imperial College, London, Imperial College Business School.
  6. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
  7. Griffin, J. E. & Steel, M. F. J., 2004. "Semiparametric Bayesian inference for stochastic frontier models," Journal of Econometrics, Elsevier, vol. 123(1), pages 121-152, November.
  8. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
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  10. Silvio Daidone & Francesco D'Amico, 2009. "Technical Efficiency, Specialization and Ownership Form: Evidences from a Pooling of Italian Hospitals," CEIS Research Paper 143, Tor Vergata University, CEIS, revised 30 Sep 2009.
  11. Fernandez, Carmen & Osiewalski, Jacek & Steel, Mark F. J., 1997. "On the use of panel data in stochastic frontier models with improper priors," Journal of Econometrics, Elsevier, vol. 79(1), pages 169-193, July.
  12. Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
  13. Mehdi Farsi & Massimo Filippini & Michael Kuenzle, 2005. "Unobserved heterogeneity in stochastic cost frontier models: an application to Swiss nursing homes," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2127-2141.
  14. Piacenza, Massimiliano & Turati, Gilberto & Vannoni, Davide, 2010. "Restructuring hospital industry to control public health care expenditure: The role of input substitutability," Economic Modelling, Elsevier, vol. 27(4), pages 881-890, July.
  15. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
  16. RITTER, Christian & SIMAR, Leopold, 1994. "Pitfalls of Normal-Gamma Stochastic Frontier Models," CORE Discussion Papers 1994041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
  18. Michela Nardo & Michaela Saisana & Andrea Saltelli & Stefano Tarantola & Anders Hoffman & Enrico Giovannini, 2005. "Handbook on Constructing Composite Indicators: Methodology and User Guide," OECD Statistics Working Papers 2005/3, OECD Publishing.
  19. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  20. John Geweke, 2004. "Getting It Right: Joint Distribution Tests of Posterior Simulators," Journal of the American Statistical Association, American Statistical Association, vol. 99, pages 799-804, January.
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