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Hospital System Taxonomy and Hospital Efficiency: A Data Envelopment Analysis Model

Author

Listed:
  • C. Christopher Lee
  • Lisa Anne Frank
  • Yong-Taek Min
  • David W. Hwang

Abstract

This study aimed to evaluate the economic efficiency of five different hospital system structures across the United States, with particular attention to the contrast between centralized and decentralized healthcare models. Using 2017 AHA survey data and a Data Envelopment Analysis (DEA) framework, we assessed hospital performance by examining production inputs—such as full-time physicians, nurses, beds, and operating expenses—and outputs including the number of discharged inpatients and outpatients as well as operating revenue. The DEA results indicate that centralized hospital systems achieve higher technical and financial efficiency relative to decentralized systems. We analyzed five system types—Centralized, Centralized Physician & Insurance, Moderately Centralized, Decentralized, and Independent Health Systems—revealing substantial differences in efficiency and economic performance. Overall, our findings suggest that centralized organizational models improve resource allocation, enhance operational efficiency, and strengthen the financial sustainability of healthcare systems.

Suggested Citation

  • C. Christopher Lee & Lisa Anne Frank & Yong-Taek Min & David W. Hwang, 2026. "Hospital System Taxonomy and Hospital Efficiency: A Data Envelopment Analysis Model," Bulletin of Applied Economics, Risk Market Journals, vol. 13(1), pages 1-13.
    • Handle: RePEc:rmk:rmkbae:v:13:y:2026:i:1:p:1-13
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    References listed on IDEAS

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    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I19 - Health, Education, and Welfare - - Health - - - Other
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other

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