Effect of Teaching on Hospital Productivity

In addition to providing direct patient care, some hospitals also are used as training grounds for medical students and physicians-in-training (medical residents). Because of these additional responsibilities, total costs are higher in teaching hospitals than their non-teaching counterparts. In this paper, we use the data envelopment analysis methodology to assess the relative productive efficiency of teaching hospitals in our sample. Outputs will be defined as an array of inpatient and outpatient services and inputs will be characterized as number of physicians, labor, beds, and medical residents. In order to evaluate relative productivity, a reference technology of 'best practice frontier' will be derived from all the observations in our sample under assumptions of both strong and weak disposability of inputs. By analyzing medical residents as weakly disposable inputs, we can estimate how much they detract from the hospital's productive capability.