IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v15y2006i3p295-310.html
   My bibliography  Save this article

Performance‐based budgeting in the public sector: an illustration from the VA health care system

Author

Listed:
  • Suthathip Yaisawarng
  • James F. Burgess

Abstract

This paper estimates frontier cost functions for US Department of Veterans Affairs (VA) hospitals in FY2000 that are consistent with economic theory and explicitly account for cost differences across patients' risk, level of access to care, quality of care, and hospital‐specific characteristics. Results indicate that on average VA hospitals in FY2000 operate at efficiency levels of 94%, as compared to previous studies on US private sector hospitals that average closer to 90% efficient. Using these cost frontiers, management systems potentially could be implemented to enhance the equitable allocation of the VA medical care global budget and systematically distribute funds across hospitals and networks. The paper also provides recommendations to improve the efficiency of delivering health care services applicable to public sector organizations. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Suthathip Yaisawarng & James F. Burgess, 2006. "Performance‐based budgeting in the public sector: an illustration from the VA health care system," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 295-310, March.
  • Handle: RePEc:wly:hlthec:v:15:y:2006:i:3:p:295-310
    DOI: 10.1002/hec.1060
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.1060
    Download Restriction: no

    References listed on IDEAS

    as
    1. Keeler, Emmett B. & Melnick, Glenn & Zwanziger, Jack, 1999. "The changing effects of competition on non-profit and for-profit hospital pricing behavior," Journal of Health Economics, Elsevier, vol. 18(1), pages 69-86, January.
    2. Kathleen Carey & James F. Burgess, 1999. "On measuring the hospital cost/quality trade‐off," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 509-520, September.
    3. Sherman T. Folland & Richard A. Hofler, 2001. "How reliable are hospital efficiency estimates? Exploiting the dual to homothetic production," Health Economics, John Wiley & Sons, Ltd., vol. 10(8), pages 683-698, December.
    4. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    5. Zuckerman, Stephen & Hadley, Jack & Iezzoni, Lisa, 1994. "Measuring hospital efficiency with frontier cost functions," Journal of Health Economics, Elsevier, vol. 13(3), pages 255-280, October.
    6. James F. Burgess, Jr. & Paul W. Wilson, 1996. "Hospital Ownership and Technical Inefficiency," Management Science, INFORMS, vol. 42(1), pages 110-123, January.
    7. Michael D. Rosko, 2001. "Cost efficiency of US hospitals: a stochastic frontier approach," Health Economics, John Wiley & Sons, Ltd., vol. 10(6), pages 539-551, September.
    8. Grannemann, Thomas W. & Brown, Randall S. & Pauly, Mark V., 1986. "Estimating hospital costs : A multiple-output analysis," Journal of Health Economics, Elsevier, vol. 5(2), pages 107-127, June.
    9. Arlene Ash & Randall P. Ellis & Gregory Pope & John Ayanian & David Bates & Helen Burstin & Lisa Iezzoni & Elizabeth McKay & Wei Yu, 2000. "Using Diagnoses to Describe Populations and Predict Costs," Papers 0099, Boston University - Industry Studies Programme.
    10. Lynk, William J, 1995. "Nonprofit Hospital Mergers and the Exercise of Market Power," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 437-461, October.
    11. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
    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. Tom Stargardt & Jonas Schreyögg & Ivan Kondofersky, 2014. "Measuring The Relationship Between Costs And Outcomes: The Example Of Acute Myocardial Infarction In German Hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 23(6), pages 653-669, June.
    2. Sonali Das & Ming‐Hui Chen & Nicholas Warren & Michael Hodgson, 2011. "Do associations between employee self‐reported organizational assessments and attitudinal outcomes change over time? An analysis of four Veterans Health Administration surveys using structural equatio," Health Economics, John Wiley & Sons, Ltd., vol. 20(12), pages 1507-1522, December.
    3. 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.
    4. Kathleen Carey & Theodore Stefos, 2011. "Controlling for quality in the hospital cost function," Health Care Management Science, Springer, vol. 14(2), pages 125-134, June.
    5. Productivity Commission, 2009. "Public and Private Hospitals," Research Reports, Productivity Commission, Government of Australia, number 37.
    6. Laura Haas & Tom Stargardt & Jonas Schreyoegg, 2012. "Cost-effectiveness of open versus laparoscopic appendectomy: a multilevel approach with propensity score matching," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(5), pages 549-560, October.
    7. Kathleen Carey & Jean M. Mitchell, 2018. "Specialization and production cost efficiency: evidence from ambulatory surgery centers," International Journal of Health Economics and Management, Springer, vol. 18(1), pages 83-98, March.
    8. Jonas Schreyögg & Tom Stargardt & Oliver Tiemann, 2011. "Costs and quality of hospitals in different health care systems: a multi‐level approach with propensity score matching," Health Economics, John Wiley & Sons, Ltd., vol. 20(1), pages 85-100, January.

    More about this item

    Statistics

    Access and download statistics

    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:wly:hlthec:v:15:y:2006:i:3:p:295-310. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.