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Measuring Hospital Efficiency through Data Envelopment Analysis when Policy-makers� Preferences Matter. An Application to a sample of Italian NHS hospitals

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Listed:
  • Dino Rizzi

    (Department of Economics, University Of Venice Ca� Foscari)

  • Vincenzo Rebba

    (Department of Economics - University of Padova)

Abstract

In this paper we show how both the choice of specific constraints on input and output weights (in accordance with health care policy-makers� preferences) and the consideration of exogenous variables outside the control of hospital management (and linked to past policy-makers� decisions) can affect the measurement of hospital technical efficiency using the Data Envelopment Analysis (DEA). Considering these issues, the DEA method is applied to measure the efficiency of 85 (public and private) hospitals in Veneto, a Northern region of Italy. The empirical analysis allows us to verify the role of weight restrictions and of demand in measuring the efficiency of hospitals operating within a National Health Service (NHS). We find that the imposition of a lower bound on the virtual weight of acute care discharges weighted by case-mix (in order to consider policy-maker objectives) reduces average hospital efficiency. Moreover, we show that, in many cases, low efficiency scores are attributable to external factors, which are not fully controlled by the hospital management; especially for public hospitals low total efficiency scores can be mainly explained by past policy-makers� decisions on the size of the hospitals or their role within the regional health care service. Finally, non-profit private hospitals exhibit a higher total inefficiency while both non-profit and for-profit hospitals are characterised by higher levels of scale inefficiency than public ones.

Suggested Citation

  • Dino Rizzi & Vincenzo Rebba, 2006. "Measuring Hospital Efficiency through Data Envelopment Analysis when Policy-makers� Preferences Matter. An Application to a sample of Italian NHS hospitals," Working Papers 2006_13, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2006_13
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    References listed on IDEAS

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    Cited by:

    1. Abhijit Das & Rashmi Banga & Dinesh Kumar, 2011. "Global Economic Crisis : Impact and Restructuring of the Services Sector in India," Trade Working Papers 23225, East Asian Bureau of Economic Research.
    2. Ng, Ying Chu, 2011. "The productive efficiency of Chinese hospitals," China Economic Review, Elsevier, vol. 22(3), pages 428-439, September.
    3. Joanicjusz Nazarko & Marta Komuda & Katarzyna Kuźmicz & Elżbieta Szubzda & Joanna Urban, 2008. "The DEA method in public sector institutions efficiency analysis on the basis of higher education institutions," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 18(4), pages 89-105.
    4. PINTO, Claudio, 2013. "Complexity of Treatment, and Changes in Efficiency and Productivity for Directly Managed Italian Hospitals," CELPE Discussion Papers 124, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.

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    More about this item

    Keywords

    Hospital performance; Technical efficiency; Data envelopment analysis; NationalHealth Service;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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