Benchmarking the Health Sector in Germany – An Application of Data Envelopment Analysis
AbstractAt present, a first round of hospital benchmarking as required by German law on health care reform takes place. After extensive discussions between hospitals and insurance companies, which are jointly responsible to deliver benchmarking results, a method with some peculiar characteristics was chosen. In this paper it is argued that the deficiencies of said method could be overcome by using Data Envelopment Analysis (DEA). The reasons that make DEA an advisable tool for policy decisions within the context of relative performance evaluation in the health care sector are discussed. In order to illustrate the potential of nonparametric frontier estimation for hospital benchmarking in Germany, a comparison of hospitals, which provide the same basic clinical care, is carried out. Controlling for differences in the case mix and for possible heterogeneity of the services which hospitals provide, substantial productivity differences can be detected. Beyond simply identifying inefficient providers DEA leads to additional insight about the reasons of inefficiency and to useful management implications.
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Bibliographic InfoPaper provided by EconWPA in its series HEW with number 0309003.
Date of creation: 06 Sep 2003
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Health care reform benchmarking relative performance evaluation Data Envelopment Analysis;
Find related papers by JEL classification:
- I19 - Health, Education, and Welfare - - Health - - - Other
- C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-09-08 (All new papers)
- NEP-EDU-2003-09-08 (Education)
- NEP-EEC-2003-09-08 (European Economics)
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- Annika Frohloff, 2007. "Cost and Technical Efficiency of German Hospitals – A Stochastic Frontier Analysis," Ruhr Economic Papers 0002, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Teresa Curristine & Zsuzsanna Lonti & Isabelle Joumard, 2007. "Improving Public Sector Efficiency: Challenges and Opportunities," OECD Journal on Budgeting, OECD Publishing, vol. 7(1), pages 1-41.
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