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Technical Efficiency of Hospitals in Ireland

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  • Gannon, Brenda

    (Economic and Social Research Institute (ESRI))

Abstract

Similar to many other European countries, the funding system for Irish hospitals is partially based on casemix, whereby resources are redistributed annually to hospitals with greater efficiency. For this reason, accurate measurement of efficiency is essential, so in this paper, we use Data Envelopment Analysis and Stochastic Frontier Analysis to measure technical efficiency of acute public hospitals in Ireland between 1992 and 2000. Although previous research elsewhere has used DEA extensively, the more recent panel model approach to estimating the stochastic frontier has not been employed to the same extent. The results from both methodologies will provide estimates of average efficiency in the hospital sector in Ireland, and this is the first time an application of this type has been performed on input and output data from Irish hospitals. While our output measure is not adjusted for casemix, it is useful for obtaining initial estimates of technical efficiency in Irish hospitals, and we show that our results are in the same range as those obtained recently for hospitals in Northern Ireland. We then use a measure of output adjusted with Diagnostic Related Groups weights and determine whether or not efficiency estimates are different to those found when we use the simple measure of output. Internationally, the comparison of the results of the stochastic frontier model to the DEA efficiency scores contribute to the expanding literature of comparisons between DEA and SFA applications.

Suggested Citation

  • Gannon, Brenda, 2004. "Technical Efficiency of Hospitals in Ireland," Papers HRBWP18, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esr:wpaper:hrb18
    Note: Published by ESRI, ISSC & University of Ulster
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    File URL: https://www.esri.ie/pubs/18.%20Technical%20Efficiency%20of%20Hospitals%20in%20Ireland.pdf
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    References listed on IDEAS

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    1. David Parkin & Bruce Hollingsworth, 1997. "Measuring production efficiency of acute hospitals in Scotland, 1991-94: validity issues in data envelopment analysis," Applied Economics, Taylor & Francis Journals, vol. 29(11), pages 1425-1433.
    2. LĂ©opold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
    3. Skinner, Jonathan, 1994. "What do stochastic frontier cost functions tell us about inefficiency?," Journal of Health Economics, Elsevier, vol. 13(3), pages 323-328, October.
    4. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    5. Grosskopf, S. & Valdmanis, V., 1987. "Measuring hospital performance : A non-parametric approach," Journal of Health Economics, Elsevier, vol. 6(2), pages 89-107, June.
    6. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. 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.
    2. Brenda Gannon, 2005. "Testing for Variation in Technical Efficiency of Hospitals in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 36(3), pages 273-294.

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