IDEAS home Printed from https://ideas.repec.org/a/eee/socmed/v71y2010i10p1872-1881.html
   My bibliography  Save this article

Examining cost variation across hospital departments-a two-stage multi-level approach using patient-level data

Author

Listed:
  • Laudicella, Mauro
  • Olsen, Kim Rose
  • Street, Andrew

Abstract

Studies of hospital efficiency seldom lead to changes in practice, partly because recommendations are unspecific or results are not seen as robust. We describe a method to compare hospital costs that utilises patient-level data. We perform a two-stage analysis in which we first consider factors that explain costs among patients and then across hospital departments. We illustrate our approach by examining the costs and characteristics of almost one million patients admitted to 136 English NHS hospital obstetrics departments in 2005/2006. We identify those departments with significantly higher costs that need to take action.

Suggested Citation

  • Laudicella, Mauro & Olsen, Kim Rose & Street, Andrew, 2010. "Examining cost variation across hospital departments-a two-stage multi-level approach using patient-level data," Social Science & Medicine, Elsevier, vol. 71(10), pages 1872-1881, November.
    • Handle: RePEc:eee:socmed:v:71:y:2010:i:10:p:1872-1881
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0277-9536(10)00602-7
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lewis, Jeffrey B. & Linzer, Drew A., 2005. "Estimating Regression Models in Which the Dependent Variable Is Based on Estimates," Political Analysis, Cambridge University Press, vol. 13(4), pages 345-364.
    2. 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.
    3. M. Stone, 2002. "How not to measure the efficiency of public services (and how one might)," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 165(3), pages 405-434, October.
    4. Adriana Castelli & Mauro Laudicella & Andrew Street, 2008. "Measuring NHS Output Growth," Working Papers 043cherp, Centre for Health Economics, University of York.
    5. Jackson, Terri, 2001. "Using computerised patient-level costing data for setting DRG weights: the Victorian (Australia) cost weight studies," Health Policy, Elsevier, vol. 56(2), pages 149-163, May.
    6. Bruce Hollingsworth & Andrew Street, 2006. "The market for efficiency analysis of health care organisations," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1055-1059, October.
    7. Peter Smith, 1997. "Model misspecification in Data Envelopment Analysis," Annals of Operations Research, Springer, vol. 73(0), pages 233-252, October.
    8. Jusko, Karen Long & Shively, W. Phillips, 2005. "Applying a Two-Step Strategy to the Analysis of Cross-National Public Opinion Data," Political Analysis, Cambridge University Press, vol. 13(4), pages 327-344.
    9. Cookson R & Laudicella M, 2009. "Do the poor still cost more? The relationship between small area income deprivation and length of stay for elective hip replacement in the English NHS from 2001/2 to 2006/7," Health, Econometrics and Data Group (HEDG) Working Papers 09/07, HEDG, c/o Department of Economics, University of York.
    10. Peter C. Smith & Andrew Street, 2005. "Measuring the efficiency of public services: the limits of analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(2), pages 401-417, March.
    11. Mason, Anne & Street, Andrew & Miraldo, Marisa & Siciliani, Luigi, 2009. "Should prospective payments be differentiated for public and private healthcare providers?," Health Economics, Policy and Law, Cambridge University Press, vol. 4(4), pages 383-403, October.
    12. Bruce Hollingsworth, 2008. "The measurement of efficiency and productivity of health care delivery," Health Economics, John Wiley & Sons, Ltd., vol. 17(10), pages 1107-1128, October.
    13. Hvenegaard, Anne & Street, Andrew & Sørensen, Torben Højmark & Gyrd-Hansen, Dorte, 2009. "Comparing hospital costs: What is gained by accounting for more than a case-mix index?," Social Science & Medicine, Elsevier, vol. 69(4), pages 640-647, August.
    14. Reinhard Busse & Jonas Schreyögg & Peter Smith, 2006. "Editorial: Hospital case payment systems in Europe," Health Care Management Science, Springer, vol. 9(3), pages 211-213, August.
    15. Nigel Rice & Andrew Jones, 1997. "Multilevel models and health economics," Health Economics, John Wiley & Sons, Ltd., vol. 6(6), pages 561-575, November.
    16. Daniel Bilodeau & Pierre-Yves Crémieux & Pierre Ouellette, 2000. "Hospital Cost Function In A Non-Market Health Care System," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 489-498, August.
    17. Jacobs,Rowena & Smith,Peter C. & Street,Andrew, 2006. "Measuring Efficiency in Health Care," Cambridge Books, Cambridge University Press, number 9780521851442.
    18. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    19. Street, Andrew & Maynard, Alan, 2007. "Activity based financing in England: the need for continual refinement of payment by results," Health Economics, Policy and Law, Cambridge University Press, vol. 2(4), pages 419-427, October.
    20. Antonio Giuffrida & Hugh Gravelle, 2001. "Measuring performance in primary care: econometric analysis and DEA," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 163-175.
    21. Kim Rose Olsen & Andrew Street, 2008. "The analysis of efficiency among a small number of organisations: How inferences can be improved by exploiting patient‐level data," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 671-681, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nils Gutacker & Chris Bojke & Silvio Daidone & Nancy J. Devlin & David Parkin & Andrew Street, 2013. "Truly Inefficient Or Providing Better Quality Of Care? Analysing The Relationship Between Risk‐Adjusted Hospital Costs And Patients' Health Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 22(8), pages 931-947, August.
    2. Carine Milcent, 2017. "Premier bilan de la T2A sur la variabilité des coûts hospitaliers," Working Papers halshs-01649554, HAL.
    3. Carine Milcent, 2017. "Premier bilan de la tarification à l’activité (T2A) sur la variabilité des coûts hospitaliers," Post-Print halshs-01522581, HAL.
    4. Thanassoulis, Emmanuel & Silva Portela, Maria C.A. & Graveney, Mike, 2014. "Using DEA to estimate potential savings at GP units at medical specialty level," Socio-Economic Planning Sciences, Elsevier, vol. 48(1), pages 38-48.
    5. Carine Milcent, 2015. "Tarification et variabilité des coûts hospitaliers : Le cas de l'infarctus du myocarde," PSE Working Papers halshs-01202684, HAL.
    6. Kristensen, Troels & Rose Olsen, Kim & Sortsø, Camilla & Ejersted, Charlotte & Thomsen, Janus Laust & Halling, Anders, 2013. "Resources allocation and health care needs in diabetes care in Danish GP clinics," Health Policy, Elsevier, vol. 113(1), pages 206-215.
    7. Johns, Benjamin & Steinhardt, Laura & Walker, Damian G. & Peters, David H. & Bishai, David, 2013. "Horizontal equity and efficiency at primary health care facilities in rural Afghanistan: A seemingly unrelated regression approach," Social Science & Medicine, Elsevier, vol. 89(C), pages 25-31.
    8. Carine Milcent, 2014. "Coût des soins hospitaliers : effet de la concurrence par la qualité," PSE Working Papers halshs-01010327, HAL.
    9. James Gaughan & Anne Mason & Andrew Street & Padraic Ward, 2012. "English Hospitals Can Improve Their Use of Resources: An Analysis of Costs and Length of Stay for Ten Treatments," Working Papers 078cherp, Centre for Health Economics, University of York.
    10. Troels Kristensen & Kim Olsen & Henrik Schroll & Janus Thomsen & Anders Halling, 2014. "Association between fee-for-service expenditures and morbidity burden in primary care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(6), pages 599-610, July.
    11. Gianluca Fiorentini & Silvana Robone & Rossella Verzulli, 2018. "How do hospital‐specialty characteristics influence health system responsiveness? An empirical evaluation of in‐patient care in the Italian region of Emilia‐Romagna," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 266-281, February.
    12. David Nuttall & David Parkin & Nancy Devlin, 2015. "Inter‐Provider Comparison Of Patient‐Reported Outcomes: Developing An Adjustment To Account For Differences In Patient Case Mix," Health Economics, John Wiley & Sons, Ltd., vol. 24(1), pages 41-54, January.
    13. Gyrd-Hansen, Dorte & Olsen, Kim R. & Sørensen, Torben H., 2012. "Socio-demographic patient profiles and hospital efficiency: Does patient mix affect a hospital's ability to perform?," Health Policy, Elsevier, vol. 104(2), pages 136-145.
    14. Adrian Gheorghe & Tracy Roberts & Karla Hemming & Melanie Calvert, 2015. "Evaluating the Generalisability of Trial Results: Introducing a Centre- and Trial-Level Generalisability Index," PharmacoEconomics, Springer, vol. 33(11), pages 1195-1214, November.
    15. Daidone, Silvio & Street, Andrew, 2013. "How much should be paid for specialised treatment?," Social Science & Medicine, Elsevier, vol. 84(C), pages 110-118.
    16. Nils Gutacker & Chris Bojke & Silvio Daidone & Nancy Devlin & Andrew Street, 2013. "Hospital Variation in Patient-Reported Outcomes at the Level of EQ-5D Dimensions," Medical Decision Making, , vol. 33(6), pages 804-818, August.
    17. J. Buckell & A. Smith & R. Longo & D. Holland, 2015. "Efficiency, heterogeneity and cost function analysis: empirical evidence from pathology services in the National Health Service in England," Applied Economics, Taylor & Francis Journals, vol. 47(31), pages 3311-3331, July.
    18. Marie Kruse & Jan Christensen, 2013. "Is quality costly? Patient and hospital cost drivers in vascular surgery," Health Economics Review, Springer, vol. 3(1), pages 1-13, December.
    19. Bache, Stefan Holst Milton & Kristensen, Troels, 2013. "A simple but efficient approach to the analysis of multilevel data," DaCHE discussion papers 2013:6, University of Southern Denmark, Dache - Danish Centre for Health Economics.
    20. Michael M. Havranek & Josef Ondrej & Philippe K. Widmer & Stella Bollmann & Simon Spika & Stefan Boes, 2023. "Using exogenous organizational and regional hospital attributes to explain differences in case‐mix adjusted hospital costs," Health Economics, John Wiley & Sons, Ltd., vol. 32(8), pages 1733-1748, August.
    21. Johannessen, Karl Arne & Kittelsen, Sverre A.C. & Hagen, Terje P., 2017. "Assessing physician productivity following Norwegian hospital reform: A panel and data envelopment analysis," Social Science & Medicine, Elsevier, vol. 175(C), pages 117-126.
    22. Thanassoulis, Emmanuel & Silva Portela, Maria & Graveney, Mike, 2016. "Identifying the scope for savings at inpatient episode level: An illustration applying DEA to chronic obstructive pulmonary disease," European Journal of Operational Research, Elsevier, vol. 255(2), pages 570-582.
    23. David Scheller‐Kreinsen & on behalf of the EuroDRG group, 2012. "How Well Do Diagnosis‐Related Group Systems Group Breast Cancer Surgery Patients?—Evidence From 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 41-54, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nils Gutacker & Chris Bojke & Silvio Daidone & Nancy J. Devlin & David Parkin & Andrew Street, 2013. "Truly Inefficient Or Providing Better Quality Of Care? Analysing The Relationship Between Risk‐Adjusted Hospital Costs And Patients' Health Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 22(8), pages 931-947, August.
    2. Adriana Castelli & Andrew Street & Rossella Verzulli & Padraic Ward, 2015. "Examining variations in hospital productivity in the English NHS," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(3), pages 243-254, April.
    3. Andrew Street & Conrad Kobel & Thomas Renaud & Josselin Thuilliez & ON BEHALF OF THE EURODRG GROUP, 2012. "How Well Do Diagnosis‐Related Groups Explain Variations In Costs Or Length Of Stay Among Patients And Across Hospitals? Methods For Analysing Routine Patient Data," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 6-18, August.
    4. Vitikainen, Kirsi & Street, Andrew & Linna, Miika, 2009. "Estimation of hospital efficiency--Do different definitions and casemix measures for hospital output affect the results?," Health Policy, Elsevier, vol. 89(2), pages 149-159, February.
    5. Margherita Neri & Patricia Cubi-Molla & Graham Cookson, 2022. "Approaches to Measure Efficiency in Primary Care: A Systematic Literature Review," Applied Health Economics and Health Policy, Springer, vol. 20(1), pages 19-33, January.
    6. Kollerup, Anna & Wadmann, Sarah & Bek, Toke & Kjellberg, Jakob, 2022. "National clinical guidelines and treatment centralization do not guarantee consistency in healthcare delivery. A mixed-methods study of wet age-related macular degeneration treatment in Denmark," Health Policy, Elsevier, vol. 126(12), pages 1291-1302.
    7. Bonasia, Mariangela & Kounetas, Konstantinos & Oreste, Napolitano, 2020. "Assessment of regional productive performance of European health systems under a metatechnology framework," Economic Modelling, Elsevier, vol. 84(C), pages 234-248.
    8. Oliver Tiemann & Jonas Schreyögg, 2012. "Changes in hospital efficiency after privatization," Health Care Management Science, Springer, vol. 15(4), pages 310-326, December.
    9. Sørensen, Torben H. & Olsen, Kim R. & Gyrd-Hansen, Dorte, 2009. "Differences in general practice initiated expenditures across Danish local health authorities--A multilevel analysis," Health Policy, Elsevier, vol. 92(1), pages 35-42, September.
    10. Schang, Laura & Hynninen, Yrjänä & Morton, Alec & Salo, Ahti, 2016. "Developing robust composite measures of healthcare quality – Ranking intervals and dominance relations for Scottish Health Boards," Social Science & Medicine, Elsevier, vol. 162(C), pages 59-67.
    11. Varabyova, Yauheniya & Schreyögg, Jonas, 2013. "International comparisons of the technical efficiency of the hospital sector: Panel data analysis of OECD countries using parametric and non-parametric approaches," Health Policy, Elsevier, vol. 112(1), pages 70-79.
    12. Roberto Colombi & Gianmaria Martini & Giorgio Vittadini, 2017. "Determinants of transient and persistent hospital efficiency: The case of Italy," Health Economics, John Wiley & Sons, Ltd., vol. 26(S2), pages 5-22, September.
    13. Herwartz, Helmut & Schley, Katharina, 2018. "Improving health care service provision by adapting to regional diversity: An efficiency analysis for the case of Germany," Health Policy, Elsevier, vol. 122(3), pages 293-300.
    14. Martin, Cécile, 2014. "Concurrence, prix et qualité de la prise en charge en EHPAD en France : Analyses micro-économétriques," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/13712 edited by Dormont, Brigitte.
    15. Daidone, Silvio & Street, Andrew, 2013. "How much should be paid for specialised treatment?," Social Science & Medicine, Elsevier, vol. 84(C), pages 110-118.
    16. Nils Gutacker & Andrew Street, 2018. "Multidimensional performance assessment of public sector organisations using dominance criteria," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 13-27, February.
    17. George Fragkiadakis & Michael Doumpos & Constantin Zopounidis & Christophe Germain, 2016. "Operational and economic efficiency analysis of public hospitals in Greece," Post-Print hal-01414677, HAL.
    18. Oliver Tiemann & Jonas Schreyögg, 2012. "Changes in hospital efficiency after privatization," Health Care Management Science, Springer, vol. 15(4), pages 310-326, December.
    19. Cavalieri, Marina & Di Caro, Paolo & Guccio, Calogero & Lisi, Domenico, 2020. "Does neighbours' grass matter? Testing spatial dependent heterogeneity in technical efficiency of Italian hospitals," Social Science & Medicine, Elsevier, vol. 265(C).
    20. Medin, Emma & Häkkinen, Unto & Linna, Miika & Anthun, Kjartan S. & Kittelsen, Sverre A.C. & Rehnberg, Clas, 2013. "International hospital productivity comparison: Experiences from the Nordic countries," Health Policy, Elsevier, vol. 112(1), pages 80-87.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:socmed:v:71:y:2010:i:10:p:1872-1881. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.