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Analysis of uncompensated hospital care using a DEA model of output congestion

Author

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  • Gary Ferrier
  • Michael Rosko
  • Vivian Valdmanis

    ()

Abstract

Uncompensated care can create financial difficulties for hospitals. The problem is likely to worsen as the number of individuals lacking health insurance continues to grow. The objective of this study is to measure how uncompensated care affects hospitals' ability to provide the services for which they do receive compensation. Applying output-based data envelopment analysis (DEA) under various assumptions on the disposability of outputs to a sample of Pennsylvania hospitals, we find that, on average, hospitals could have produced 7% more output if they had all operated on the best-practice frontier and that uncompensated care reduced the production of other hospital outputs by 2%. Thus, even if hospitals were to operate efficiently, they might still face financial distress as a result of providing uncompensated care. The findings in our study suggest that policy makers should continue looking at ways to increase funding to hospitals providing uncompensated care while not distorting economic incentives to reduce excessive costs. Copyright Springer Science + Business Media, Inc. 2006

Suggested Citation

  • Gary Ferrier & Michael Rosko & Vivian Valdmanis, 2006. "Analysis of uncompensated hospital care using a DEA model of output congestion," Health Care Management Science, Springer, vol. 9(2), pages 181-188, May.
  • Handle: RePEc:kap:hcarem:v:9:y:2006:i:2:p:181-188
    DOI: 10.1007/s10729-006-7665-8
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Duen-Yian Yeh & Ching-Hsue Cheng, 2016. "Performance Management of Taiwan’s National Hospitals," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 15(01), pages 187-213, January.
    2. Carlos Barros & António Gomes de Menezes & Nicolas Peypoch & Bernardin Solonandrasana & José Vieira, 2008. "An analysis of hospital efficiency and productivity growth using the Luenberger indicator," Health Care Management Science, Springer, vol. 11(4), pages 373-381, December.
    3. Leleu, Hervé, 2013. "Shadow pricing of undesirable outputs in nonparametric analysis," European Journal of Operational Research, Elsevier, vol. 231(2), pages 474-480.
    4. De Nicola, Arianna & Gitto, Simone & Mancuso, Paolo, 2011. "A two-stage DEA model to evaluate the efficiency of the Italian health system," MPRA Paper 39126, University Library of Munich, Germany.
    5. Perelman, Sergio & Santín, David, 2008. "Imposing Weak Monotonicity on Parametric Distance Function Estimations," Efficiency Series Papers 2008/02, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    6. 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.
    7. : Álvaro Almeida & José Pedro Fique, 2011. "Evaluating Hospital Efficiency Adjusting for Quality Indicators: an Application to Portuguese NHS Hospitals," FEP Working Papers 435, Universidade do Porto, Faculdade de Economia do Porto.
    8. Jan Clement & Vivian Valdmanis & Gloria Bazzoli & Mei Zhao & Askar Chukmaitov, 2008. "Is more better? An analysis of hospital outcomes and efficiency with a DEA model of output congestion," Health Care Management Science, Springer, vol. 11(1), pages 67-77, March.
    9. Ng, Ying Chu, 2011. "The productive efficiency of Chinese hospitals," China Economic Review, Elsevier, vol. 22(3), pages 428-439, September.
    10. Barros, Carlos Pestana & Menezes, Antonio & Vieira, José António Cabral & Peypoch, Nicolas & Solonandrasana, Bernardin, 2007. "An Analysis of Hospital Efficiency and Productivity Growth Using the Luenberger Productivity Indicator," IZA Discussion Papers 2689, Institute for the Study of Labor (IZA).
    11. Maria Castro Lobo & Yasar Ozcan & Angela Silva & Marcos Lins & Roberto Fiszman, 2010. "Financing reform and productivity change in Brazilian teaching hospitals: Malmquist approach," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 18(2), pages 141-152, June.
    12. Pedro Simões & Rui Marques, 2011. "Performance and congestion analysis of the portuguese hospital services," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 19(1), pages 39-63, March.
    13. Ananda, Jayanath & Gitto, Simone & Mancuso, Paolo, 2013. "Ownership, Productivity Change in the Australian Urban Water Sector: a Bootstrap Malmquist indices approach," MPRA Paper 50384, University Library of Munich, Germany.
    14. Matranga, Domenica & Sapienza, Francesca, 2015. "Congestion analysis to evaluate the efficiency and appropriateness of hospitals in Sicily," Health Policy, Elsevier, vol. 119(3), pages 324-332.

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