Health inefficiency and unobservable heterogeneity - empirical evidence from pathology services in the UK National Health Service
Pathology services are increasingly recognised as key to effective healthcare delivery - underpinning diagnosis, long-term disease management and research. To the extent that pathology services affect a patient’s treatment pathway, significant healthcare costs are influenced directly by the performance of these services. Pathology is thus closely tied to a multiplicity of other healthcare services, meaning that inefficient practice here can reverberate throughout the healthcare system. Given pressures on the UK Department of Health to make efficiency savings and that little is known about the efficiency of pathology laboratories, this area offers unlocked potential for timely efficiency gains. We measure inefficiency to identify potential efficiency savings available in these services. Inefficiency is measured by applying Stochastic Frontiers to a panel of 57 laboratories over a five year period. Panel data techniques can account for unobservable heterogeneity and we use a series of statistical tests to decide between models. In addition, we report the impacts of the determinants of laboratory costs, thus providing useful information to policy makers. We find 15% potential efficiency savings in pathology services in this sample, which implies £450m in monetary terms in pathology across the NHS.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Phone: Charles Thackrah Building, 101 Clarendon Road, LEEDS LS9 2LJ|
Fax: +44 (0) 113 343 3470
Web page: http://medhealth.leeds.ac.uk/auhe
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- William Greene, 2008.
"A Stochastic Frontier Model with Correction for Sample Selection,"
08-9, New York University, Leonard N. Stern School of Business, Department of Economics.
- William Greene, 2010. "A stochastic frontier model with correction for sample selection," Journal of Productivity Analysis, Springer, vol. 34(1), pages 15-24, August.
- Peter C. Smith & Andrew D. Street, 2013. "On The Uses Of Routine Patient‐Reported Health Outcome Data," Health Economics, John Wiley & Sons, Ltd., vol. 22(2), pages 119-131, 02.
- Nils Gutacker & Chris Bojke & Silvio Daidone & Nancy Devlin & David Parkin & Andrew Street, 2011.
"Truly inefficient or providing better quality of care? Analysing the relationship between riskadjusted hospital costs and patients’ health outcomes,"
068cherp, Centre for Health Economics, University of York.
- Nils Gutacker & Chris Bojke & Silvio Daidone & Nancy J. Devlin & David Parkin & Andrew Street, 2013. "Truly Inefficient Or Providing Better Quality Of Care? Analysing The Relationship Between Risk‐Adjusted Hospital Costs And Patients' Health Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 22(8), pages 931-947, 08.
- Jochen Hartwig, 2006.
"What Drives Health Care Expenditure? Baumol’s Model of ‘Unbalanced Growth’ Revisited,"
KOF Working papers
06-133, KOF Swiss Economic Institute, ETH Zurich.
- Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
- Bates, Laurie J. & Santerre, Rexford E., 2013. "Does the U.S. health care sector suffer from Baumol's cost disease? Evidence from the 50 states," Journal of Health Economics, Elsevier, vol. 32(2), pages 386-391.
- Alfons Palangkaraya & Jongsay Yong, 2013. "Effects of competition on hospital quality: an examination using hospital administrative data," The European Journal of Health Economics, Springer, vol. 14(3), pages 415-429, June.
- Christensen, Laurits R & Greene, William H, 1976. "Economies of Scale in U.S. Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 655-76, August.
- Carol Propper & Simon Burgess & Denise Gossage, 2008.
"Competition and Quality: Evidence from the NHS Internal Market 1991-9,"
Royal Economic Society, vol. 118(525), pages 138-170, 01.
- Burgess, Simon & Gossage, Denise & Propper, Carol, 2003. "Competition and Quality: Evidence from the NHS Internal Market 1991-9," CEPR Discussion Papers 4026, C.E.P.R. Discussion Papers.
- Daidone, Silvio & Street, Andrew, 2013. "How much should be paid for specialised treatment?," Social Science & Medicine, Elsevier, vol. 84(C), pages 110-118.
- J. A. Hausman, 1976.
"Specification Tests in Econometrics,"
185, Massachusetts Institute of Technology (MIT), Department of Economics.
- Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
- Peter C. Smith & Andrew Street, 2005. "Measuring the efficiency of public services: the limits of analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(2), pages 401-417.
- Peter Goodridge & Jonathan Haskel & Gavin Wallis, 2013.
"Can Intangible Investment Explain the UK Productivity Puzzle?,"
National Institute Economic Review,
National Institute of Economic and Social Research, vol. 224(1), pages R48-R58, May.
- Haskel, J & Goodridge, P & Wallis, G, 2013. "Can intangible investment explain the UK productivity puzzle?," Working Papers 11140, Imperial College, London, Imperial College Business School.
- Marisa Miraldo & Maria Goddard & Peter C Smith, 2006. "The incentive effects of payment by results," Working Papers 019cherp, Centre for Health Economics, University of York.
- Jean Spinks & Bruce Hollingsworth, 2009. "Cross-country comparisons of technical efficiency of health production: a demonstration of pitfalls," Applied Economics, Taylor & Francis Journals, vol. 41(4), pages 417-427.
- Bruce Hollingsworth & P.J. Dawson & N. Maniadakis, 1999. "Efficiency measurement of health care: a review of non‐parametric methods and applications," Health Care Management Science, Springer, vol. 2(3), pages 161-172, July.
- Medhi Farsi & Massimo Filippini, 2006.
"Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland,"
Quaderni della facoltà di Scienze economiche dell'Università di Lugano
0606, USI Università della Svizzera italiana.
- Mehdi Farsi & Massimo Filippini, 2008. "Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 335-350.
- Antonio Giuffrida and & Hugh Gravelle, .
"Measuring Performance in Primary Care: Econometric Analysis and DEA,"
99/36, Department of Economics, University of York.
- Antonio Giuffrida & Hugh Gravelle, 2001. "Measuring performance in primary care: econometric analysis and DEA," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 163-175.
- Ryan Mutter & William Greene & William Spector & Michael Rosko & Dana Mukamel, 2013. "Investigating the impact of endogeneity on inefficiency estimates in the application of stochastic frontier analysis to nursing homes," Journal of Productivity Analysis, Springer, vol. 39(2), pages 101-110, April.
- Carol Propper & Deborah Wilson, 2003.
"The Use and Usefulness of Performance Measures in the Public Sector,"
The Centre for Market and Public Organisation
03/073, Department of Economics, University of Bristol, UK.
- Carol Propper & Deborah Wilson, 2003. "The Use and Usefulness of Performance Measures in the Public Sector," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 250-267, Summer.
- Luigi Siciliani & Peter Sivey & Andrew Street, 2013. "Differences In Length Of Stay For Hip Replacement Between Public Hospitals, Specialised Treatment Centres And Private Providers: Selection Or Efficiency?," Health Economics, John Wiley & Sons, Ltd., vol. 22(2), pages 234-242, 02.
- 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.
- Pablo Arocena & David S. Saal & Tim Coelli, 2012. "Vertical and Horizontal Scope Economies in the Regulated U .S . Electric Power Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 60(3), pages 434-467, 09.
- Sheila M. Bird & Cox Sir David & Vern T. Farewell & Goldstein Harvey & Holt Tim & Smith Peter C., 2005. "Performance indicators: good, bad, and ugly," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(1), pages 1-27.
- Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2012.
"Does Competition Improve Public Hospitals' Efficiency? Evidence from a Quasi-Experiment in the English National Health Service,"
CEP Discussion Papers
dp1125, Centre for Economic Performance, LSE.
- Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2012. "Does competition improve public hospitals’ efficiency?: evidence from a quasi-experiment in the English National Health Service," LSE Research Online Documents on Economics 42057, London School of Economics and Political Science, LSE Library.
- Laudicella, Mauro & Olsen, Kim Rose & Street, Andrew, 2010. "Examining cost variation across hospital departments-a two-stage multi-level approach using patient-level data," Social Science & Medicine, Elsevier, vol. 71(10), pages 1872-1881, November.
- 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.
- Rafael Cuesta, 2000. "A Production Model With Firm-Specific Temporal Variation in Technical Inefficiency: With Application to Spanish Dairy Farms," Journal of Productivity Analysis, Springer, vol. 13(2), pages 139-158, March.
- Kumbhakar, Subal C & Hjalmarsson, Lennart, 1995. "Labour-Use Efficiency in Swedish Social Insurance Offices," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(1), pages 33-47, Jan.-Marc.
- Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
- Murillo-Zamorano, Luis R. & Petraglia, C., 2008.
"Technical efficiency in primary health care: does quality matter?,"
10725, University Library of Munich, Germany.
- Luis Murillo-Zamorano & Carmelo Petraglia, 2011. "Technical efficiency in primary health care: does quality matter?," The European Journal of Health Economics, Springer, vol. 12(2), pages 115-125, April.
- Mehdi Farsi & Massimo Filippini & Michael Kuenzle, 2005. "Unobserved heterogeneity in stochastic cost frontier models: an application to Swiss nursing homes," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2127-2141.
- 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.
- Amado, Carla Alexandra da Encarnação Filipe & Santos, Sérgio Pereira dos, 2009. "Challenges for performance assessment and improvement in primary health care: The case of the Portuguese health centres," Health Policy, Elsevier, vol. 91(1), pages 43-56, June.
- Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
- Frank Eijkenaar, 2013. "Key issues in the design of pay for performance programs," The European Journal of Health Economics, Springer, vol. 14(1), pages 117-131, February.
When requesting a correction, please mention this item's handle: RePEc:lee:wpaper:1307. 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: (Judy Wright)
If references are entirely missing, you can add them using this form.