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Reforming the hospital service structure to improve efficiency: Urban hospital specialization

Listed author(s):
  • Lee, Kwang-soo
  • Chun, Ki-hong
  • Lee, Jung-soo
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    The objective of this study is to explain the relationship between the case-mix specialization index and efficiency of inpatient hospital care services. Hospital specialization was measured using the information theory index constructed from diagnosis-related group numbers of hospitals in Seoul, Korea, in 2004. Hospital performance was measured by technical efficiency scores computed by data envelopment analysis for 2004. Multiple regression analysis models were applied to identify the internal and external factors that affected the extent of hospital specialization status as well as the efficiency of hospitals. The data envelopment analysis showed that input variables such as the number of beds, doctors and nurses were related to hospital efficiency. Hospitals had different levels of specialization in patient services, and more specialized hospitals were more likely to be efficient (odds ratio = 25.95). Internal characteristics of providers had more significant effects on the extent of specialization than market conditions. These findings help to explain the relationship among hospitals, specialization, market conditions and provider performance. The study results related to the rearrangement of hospital services in a city. Further study including hospitals from other regions will increase the generalizability of results, and policy makers can use the information in making policy for the specialized hospital industry in Korea.

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    Article provided by Elsevier in its journal Health Policy.

    Volume (Year): 87 (2008)
    Issue (Month): 1 (July)
    Pages: 41-49

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    Handle: RePEc:eee:hepoli:v:87:y:2008:i:1:p:41-49
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    1. David Dranove & Mark Shanley & Carol Simon, 1992. "Is Hospital Competition Wasteful?," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 247-262, Summer.
    2. Lee, Kwangsoo & Lee, Sangil, 2007. "Effects of the DRG-based prospective payment system operated by the voluntarily participating providers on the cesarean section rates in Korea," Health Policy, Elsevier, vol. 81(2-3), pages 300-308, May.
    3. Ozcan, Yasar A., 1995. "Efficiency of hospital service production in local markets: The balance sheet of U.S. medical armament," Socio-Economic Planning Sciences, Elsevier, vol. 29(2), pages 139-150, June.
    4. Farley, Dean E., 1989. "Measuring casemix specialization and the concentration of diagnoses in hospitals using information theory," Journal of Health Economics, Elsevier, vol. 8(2), pages 185-207, June.
    5. 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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