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Measuring Hospital Efficiency through Data Envelopment Analysis when Policy-makers’ Preferences Matter. An Application to a sample of Italian NHS hospitals

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  • Dino Rizzi

    ()
    (Department of Economics, University Of Venice Ca’ Foscari)

  • Vincenzo Rebba

    (Department of Economics - University of Padova)

Abstract

In this paper we show how both the choice of specific constraints on input and output weights (in accordance with health care policy-makers’ preferences) and the consideration of exogenous variables outside the control of hospital management (and linked to past policy-makers’ decisions) can affect the measurement of hospital technical efficiency using the Data Envelopment Analysis (DEA). Considering these issues, the DEA method is applied to measure the efficiency of 85 (public and private) hospitals in Veneto, a Northern region of Italy. The empirical analysis allows us to verify the role of weight restrictions and of demand in measuring the efficiency of hospitals operating within a National Health Service (NHS). We find that the imposition of a lower bound on the virtual weight of acute care discharges weighted by case-mix (in order to consider policy-maker objectives) reduces average hospital efficiency. Moreover, we show that, in many cases, low efficiency scores are attributable to external factors, which are not fully controlled by the hospital management; especially for public hospitals low total efficiency scores can be mainly explained by past policy-makers’ decisions on the size of the hospitals or their role within the regional health care service. Finally, non-profit private hospitals exhibit a higher total inefficiency while both non-profit and for-profit hospitals are characterised by higher levels of scale inefficiency than public ones.

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File URL: http://www.unive.it/media/allegato/DIP/Economia/Working_papers/Working_papers_2006/WP_DSE_Rebba_Rizzi_13_06.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2006_13.

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Length: 30 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:ven:wpaper:2006_13

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Keywords: Hospital performance; Technical efficiency; Data envelopment analysis; NationalHealth Service;

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References

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  1. Liam O'Neill, 1998. "Multifactor efficiency in Data Envelopment Analysis with an application to urban hospitals," Health Care Management Science, Springer, vol. 1(1), pages 19-27, September.
  2. Rajiv D. Banker & Robert F. Conrad & Robert P. Strauss, 1986. "A Comparative Application of Data Envelopment Analysis and Translog Methods: An Illustrative Study of Hospital Production," Management Science, INFORMS, vol. 32(1), pages 30-44, January.
  3. Juan Ventura & Eduardo GonzáLez & Ana Cárcaba, 2004. "Efficiency and Program-Contract Bargaining in Spanish Public Hospitals," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(4), pages 549-573, December.
  4. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  5. Bruce Hollingsworth & P.J. Dawson & N. Maniadakis, 1999. "Efficiency measurement of health care: a review of non‐parametric methods and applications," Health Care Management Science, Springer, vol. 2(3), pages 161-172, July.
  6. L. Steinmann & P. Zweifel, 2003. "On the (in)efficiency of Swiss hospitals," Applied Economics, Taylor & Francis Journals, vol. 35(3), pages 361-370.
  7. Puig-Junoy, Jaume, 2000. "Partitioning input cost efficiency into its allocative and technical components: an empirical DEA application to hospitals," Socio-Economic Planning Sciences, Elsevier, vol. 34(3), pages 199-218, September.
  8. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
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Cited by:
  1. PINTO, Claudio, 2013. "Complexity of Treatment, and Changes in Efficiency and Productivity for Directly Managed Italian Hospitals," CELPE Discussion Papers 124, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  2. Ng, Ying Chu, 2011. "The productive efficiency of Chinese hospitals," China Economic Review, Elsevier, vol. 22(3), pages 428-439, September.
  3. Joanicjusz Nazarko & Marta Komuda & Elzbieta Szubzda, 2008. "The DEA method in public sector institutions efficiency analysis on the basis of higher education institutions," Operations Research and Decisions, Wroclaw University of Technology, Institute of Organization and Management, vol. 4, pages 89-105.
  4. Das, Abhijit & Banga, Rashmi & Kumar, Dinesh, 2011. "Global Economic Crisis: Impact and Restructuring of the Services Sector in India," ADBI Working Papers 311, Asian Development Bank Institute.

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