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The impact of internal markets on health care efficiency: evidence from health care reforms in Sweden

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  • U. -G. Gerdtham
  • C. Rehnberg
  • M. Tambour

Abstract

A purchaser/provider split together with output-based reimbursement were recently introduced by several Swedish county councils. These changes have been motivated by arguments of efficiency and consumer choice. This paper tests the null hypothesis that hospital services are provided as efficiently by county councils with internal markets and output-based reimbursement as by county councils with budget reimbursement. We first estimate technical efficiency using data envelopment analysis and then we regress the efficiency scores as the dependent variable on new internal organizations in a multiple regression by use of pooled cross-section data for the 26 county councils for two years (1993 and 1994). The results reject our null hypothesis and we conclude that the organizational changes in the county councils improve health care efficiency. Our results further indicate that the potential savings in costs due to a hypothetical switch from budget based allocation to an output based allocation is about 13%. We also found some evidence indicating that county councils with a nonsocialist political majority are relatively more efficient than those with a socialist regime and that large county councils are more efficient than small county councils.

Suggested Citation

  • U. -G. Gerdtham & C. Rehnberg & M. Tambour, 1999. "The impact of internal markets on health care efficiency: evidence from health care reforms in Sweden," Applied Economics, Taylor & Francis Journals, vol. 31(8), pages 935-945.
    • Handle: RePEc:taf:applec:v:31:y:1999:i:8:p:935-945
    DOI: 10.1080/000368499323652
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    Cited by:

    1. Biorn, Erik & Hagen, Terje P. & Iversen, Tor & Magnussen, Jon, 2002. "The Effect of Activity-Based Financing on Hospital Efficiency: A Panel Data Analysis of DEA Efficiency Scores 1992-2000," MPRA Paper 8099, University Library of Munich, Germany.
    2. Theurl, Engelbert & Winner, Hannes, 2007. "The impact of hospital financing on the length of stay: Evidence from Austria," Health Policy, Elsevier, vol. 82(3), pages 375-389, August.
    3. Pablo Gottret & George Schieber, 2006. "Health Financing Revisited : A Practitioner's Guide," World Bank Publications - Books, The World Bank Group, number 7094, April.
    4. Pedersen, Kjeld Møller, 2009. "Reforming decentralized integrated health care systems: Theory and the case of the Norwegian reform," HERO Online Working Paper Series 2002:7, University of Oslo, Health Economics Research Programme.
    5. Carl Mela & Praveen Kopalle, 2002. "The impact of collinearity on regression analysis: the asymmetric effect of negative and positive correlations," Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 667-677.
    6. Galina Besstremyannaya, 2013. "The impact of Japanese hospital financing reform on hospital efficiency: A difference-in-difference approach," The Japanese Economic Review, Japanese Economic Association, vol. 64(3), pages 337-362, September.
    7. Magnussen, Jon & Nyland, Kari, 2008. "Measuring efficiency in clinical departments," Health Policy, Elsevier, vol. 87(1), pages 1-7, July.
    8. Pereira, Miguel Alves & Figueira, José Rui & Marques, Rui Cunha, 2020. "Using a Choquet integral-based approach for incorporating decision-maker’s preference judgments in a Data Envelopment Analysis model," European Journal of Operational Research, Elsevier, vol. 284(3), pages 1016-1030.
    9. Moreno-Serra, Rodrigo & Wagstaff, Adam, 2010. "System-wide impacts of hospital payment reforms: Evidence from Central and Eastern Europe and Central Asia," Journal of Health Economics, Elsevier, vol. 29(4), pages 585-602, July.
    10. Hamada, Hironori & Sekimoto, Miho & Imanaka, Yuichi, 2012. "Effects of the per diem prospective payment system with DRG-like grouping system (DPC/PDPS) on resource usage and healthcare quality in Japan," Health Policy, Elsevier, vol. 107(2), pages 194-201.
    11. Bao Hoang Nguyen & Shawna Grosskopf & Jongsay Yong & Valentin Zelenyuk, 2024. "Activity‐based funding reform and the performance of public hospitals: The case of Queensland, Australia," Economic Inquiry, Western Economic Association International, vol. 62(4), pages 1679-1701, October.
    12. Cavalieri, M. & Guccio, C. & Lisi, D. & Pignataro, G., 2015. "Does the Extent of Per-Case Payment System Affect Hospital Efficiency? Evidence from the Italian NHS," Health, Econometrics and Data Group (HEDG) Working Papers 15/29, HEDG, c/o Department of Economics, University of York.
    13. Kim-Huong Nguyen & Tim Coelli, 2009. "Quantifying the effects of modelling choices on hospital efficiency measures: A meta-regression analysis," CEPA Working Papers Series WP072009, School of Economics, University of Queensland, Australia.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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