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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. Martin Gaynor & Mauro Laudicella & Carol Propper, 2011. "Can Governments Do It Better? Merger Mania and Hospital Outcomes in the English NHS," NBER Working Papers 17608, National Bureau of Economic Research, Inc.
  2. 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.
  3. 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.
  4. Ritter, C. & Simar, L., . "Pitfalls of normal-gamma stochastic frontier models," CORE Discussion Papers RP -1272, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Wang, Hung-jen & Schmidt, Peter, 2001. "One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels," MPRA Paper 31075, University Library of Munich, Germany, revised Mar 2002.
  6. Mehdi Farsi & Massimo Filippini, 2008. "Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 335-350.
  7. Berta, P & Callea, G & Martini, G & Vittadini, G, 2009. "The effects of upcoding, cream skimming and readmissions on the Italian hospitals efficiency: a population–based investigation," MPRA Paper 17671, University Library of Munich, Germany.
  8. 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.
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  12. 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.
  13. 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.
  14. 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.
  15. 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.
  16. Philippe K Widmer & Peter Zweifel & Mehdi Farsi, 2010. "Accounting For Heterogeneity In The Measurement of Hospital Performance," Economics Discussion / Working Papers 10-21, The University of Western Australia, Department of Economics.
  17. 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.
  18. 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.
  19. 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.
  20. Gian Paolo Barbetta & Gilberto Turati & Angelo M. Zago, 2007. "Behavioral differences between public and private not-for-profit hospitals in the Italian national health service," Health Economics, John Wiley & Sons, Ltd., vol. 16(1), pages 75-96.
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