Estimation of hospital efficiency—Do different definitions and casemix measures for hospital output affect the results?

Applications of data envelopment analysis in acute care hospitals: a systematic literature review, 1984-2022

This study reviews scholarly publications on data envelopment analysis (DEA) studies on acute care hospital (ACH) efficiency published between 1984 and 2022 in scholarly peer-reviewed journals. We employ systematic literature review (SLR) method to identify and analyze pertinent past research using predetermined steps. The SLR offers a comprehensive resource that meticulously analyzes DEA methodology for practitioners and researchers focusing on ACH efficiency measurement. The articles reviewed in the SLR are analyzed and synthesized based on the nature of the DEA modelling process and the key findings from the DEA models. The key findings from the DEA models are presented under the following sections: effects of different ownership structures; impacts of specific healthcare reforms or other policy interventions; international and multi-state comparisons; effects of changes in competitive environment; impacts of new technology implementations; effects of hospital location; impacts of quality management interventions; impact of COVID-19 on hospital performance; impact of teaching status, and impact of merger. Furthermore, the nature of DEA modelling process focuses on use of sensitivity analysis; choice of inputs and outputs; comparison with Stochastic Frontier Analysis; use of congestion analysis; use of bootstrapping; imposition of weight restrictions; use of DEA window analysis; and exogenous factors. The findings demonstrate that, despite several innovative DEA extensions and hospital applications, over half of the research used the conventional DEA models. The findings also show that the most often used inputs in the DEA models were labor-oriented inputs and hospital beds, whereas the most frequently used outputs were outpatient visits, followed by surgeries, admissions, and inpatient days. Further research on the impact of healthcare reforms and health information technology (HIT) on hospital performance is required, given the number of reforms being implemented in many countries and the role HIT plays in enhancing care quality and lowering costs. We conclude by offering several new research directions for future studies.

Efficiency and Resource Allocation in Government Hospitals in Saudi Arabi: A Casemix Index Approach

In Saudi Arabia, the evaluation of healthcare institutions' performance and efficiency is gaining prominence to ensure effective resource utilization. This study aims to assess the efficiency of government hospitals in Saudi Arabia using the case mix index (CMI) approach. Comprehensive data from 67 MoH hospitals were collected and analyzed. The CMI was calculated by assigning weights to different patient groups based on case complexity and resource requirements, facilitating comparisons of hospital performance in terms of resource utilization and patient outcomes. The findings reveal variations in the CMI across hospitals in relation to size and type. The average CMI was 1.26, with the highest recorded at 1.67 and the lowest at 1.02. Medical cities demonstrated the highest CMI (1.47), followed by specialized hospitals (1.32), and general hospitals (1.21). The study highlights opportunities for enhancing productivity and efficiency, particularly in hospitals with lower CMI, by benchmarking against peer institutions with similar capacities and patient case mix. These findings have significant implications for hospital operations and resource allocation policies, supporting ongoing efforts to improve the efficiency of government hospitals in Saudi Arabia. By incorporating these insights into healthcare strategies, policymakers can work towards enhancing the overall performance and effectiveness of the healthcare system.

Assessing the financial efficiency of healthcare services and its influencing factors of financial development: fresh evidences from three-stage DEA model based on Chinese provincial level data

Pediatrics is an integral part of public health services. With the impact of the epidemic and the high-quality transformation of China's development, the contradiction in the supply of pediatric public services has become more prominent. Scientific evaluation of the efficiency and quality of pediatric services, clarifying the redundancy of pediatric input resources and adjusting the construction of pediatric services with the help of influencing factors have become important research topics. This paper uses the three-stage SBM-DEA model to summarize the efficiency of China's pediatric services using panel data from 31 provinces and cities in 2008-2019, taking into account undesired outputs such as doctor-patient disputes. Among them, the evaluation system focuses on the role of financial, capital, and other factors, and the Tobit regression model is used to clarify the degree of influence of various factors. The study found that (1) China's pediatric service supply has the characteristics of geographic heterogeneity. (2) The redundancy of various resource inputs is apparent, and the supporting capacity of financial capital is not significant. (3) The economic, technological, and professional environment helps to digest the redundancy of inputs. (4) Capital, urbanization, education development, and birth rate increase under financial operation will promote the increase of the efficiency of pediatric public services.

Adding a Social Risk Adjustment Into the Estimation of Efficiency: The Case of Chilean Hospitals

BACKGROUND AND OBJECTIVES

There is much interest in adding social variables to hospital performance assessments. Many of the existing analyses, however, already include patients' diagnosis data, and it is not clear that adding a social adjustment variable would improve the quality of the results: the growing literature on this issue provides mixed results. The purpose in this study was to add evidence from a developing country into this discussion.

METHODS

We estimate the efficiency of hospitals controlling for casemix, with and without adjusting the hospital's casemix for the patients' sociodemographic variables. The magnitude of the adjustment is based on the observed impact of age, sex, and income on length of stay, conditional on the diagnosis related group (DRG). We use a data envelopment analysis (DEA) to assess the efficiency of 50 Chilean hospitals' discharges, including 780 DRGs and covering about 60% of total discharges in Chile from 2013 to 2015.

RESULTS

We found that the sociodemographic adjustment introduces very small changes in the DEA estimation of efficiency. The underlying reason is the relatively low influence of sociodemographics on hospital costs, conditional on DRG, and the changing pattern of sociodemographics across DRGs for any given hospital.

CONCLUSION

We conclude that the casemix-adjusted estimation of hospital efficiency is robust to the heterogeneity of patients' sociodemographic heterogeneity across hospitals. These results confirm, in a developing country, what has been observed in developed countries. For management purposes, then, the processing costs of adding social variables into hospitals' performance assessments might not be justified.

Efficiency in chronic illness care coordination: public-private collaboration models vs. traditional management

Background

The aim of this paper is to analyze the differences in the coordination of chronic illness care between the different public hospital management models coexisting in the Spanish region of Madrid (25 hospitals) during the period 2013–2017.

Methods

The performance of hospitals might be affected by the characteristics of the population they serve and, therefore, this information should be taken into account when estimating efficiency measures. For this purpose, we apply the nonparametric Data Envelopment Analysis (DEA) conditioned to some contextual variables and adapted to a dynamic framework, so that we can assess hospitals during a five-year period. The outputs considered are preventable hospitalizations, readmissions for heart failure and readmissions for chronic obstructive pulmonary disease, whereas the inputs considered are the number of beds, personnel (physicians and other healthcare professionals) and total expenditure on goods and services.

Results

The results suggest that the level of efficiency demonstrated by the public-private collaboration models of hospital management is higher than traditionally managed hospitals throughout the analyzed period. Nevertheless, we notice that efficiency differences among hospitals are significantly reduced when contextual factors were taken into account.

Conclusions

Hospitals managed under public-private collaboration models are more efficient than those under traditional management in terms of chronic illness care coordination, being this difference attributable to more agile and flexible management under the collaborative models.

Supplementary Information

Supplementary information accompanies this paper at 10.1186/s12913-020-05894-z.

Analysis of the technical efficiency of the forms of hospital management based on public-private collaboration of the Madrid Health Service, as compared with traditional management

FUNDAMENTALS

The study aims to carry out a comparative analysis of the technical efficiency of hospital management based on public-private collaboration, as compared with traditional management. Specifically, we compare traditionally managed public hospitals, public hospitals managed by a private finance initiative (PFI), public hospitals managed through a public-private partnership (PPP), and hospitals managed through other forms of management, during the period 2009 to 2014, in the hospitals dependent on the Madrid Health Service (SERMAS).

METHODS

The study covers all publicly owned general hospitals under SERMAS, consisting of seven PFI hospitals, three PPP hospitals, 11 traditionally managed public hospitals (with the category of general hospital), and four hospitals managed through other forms of hospital management. The technical efficiency indices of the hospitals were calculated using the data envelopment analysis technique. Subsequently, a sensitivity analysis was performed by bootstrapping and variation of model variables to verify their impact on efficiency. Finally, an analysis of the evolution of efficiency in the analyzed period was carried out using the Malmquist Index.

RESULTS

In all the analysis models carried out in the analyzed period, the hospitals managed based on public-private collaboration were more efficient than the hospitals under traditional management.

CONCLUSIONS

The greater efficiency of hospitals managed based on public-private collaboration, as compared with traditional management, could be attributed to greater organizational and management flexibility.

Integrated Analysis of Healthcare Efficiency: A Systematic Review

Data Envelopment Analysis (DEA) has been used as a performance measurement tool in efficiency assessment of healthcare systems. However, over the years, researchers and health practitioners presented the theoretical and methodological limitations of DEA that limits the full view of healthcare efficiency. To address these limitations, a commonly used strategy is to integrate other statistical methods and techniques with DEA to provide better efficiency evaluation. This paper reviews 57 studies with DEA applications in the healthcare industry to illustrate the integrated analysis of healthcare efficiency. With DEA as the central method, regression models in conjunction with statistical tests are commonly used. Input-oriented radial DEA models using predominantly capacity-related inputs and activity-related outputs and following either constant return to scale or variable return to scale assumptions are mostly applied to measure healthcare efficiency.

The Influence of Hospital Market Competition on Patient Mortality and Total Performance Score

The Affordable Care Act of 2010 launch of Medicare Value-Based Purchasing has become the platform for payment reform. It is a mechanism by which buyers of health care services hold providers accountable for high-quality and cost-effective care. The objective of the study was to examine the relationship between quality of hospital care and hospital competition using the quality-quantity behavioral model of hospital behavior. The quality-quantity behavioral model of hospital behavior was used as the conceptual framework for this study. Data from the American Hospital Association database, the Hospital Compare database, and the Area Health Resources Files database were used. Multivariate regression analysis was used to examine the effect of hospital competition on patient mortality. Hospital market competition was significantly and negatively related to the 3 mortality rates. Consistent with the literature, hospitals located in more competitive markets had lower mortality rates for patients with acute myocardial infarction, heart failure, and pneumonia. The results suggest that hospitals may be more readily to compete on quality of care and patient outcomes. The findings are important because policies that seek to control and negatively influence a competitive hospital environment, such as Certificate of Need legislation, may negatively affect patient mortality rates. Therefore, policymakers should encourage the development of policies that facilitate a more competitive and transparent health care marketplace to potentially and significantly improve patient mortality.

Impact of the Local Public Hospital Reform on the Efficiency of Medium-Sized Hospitals in Japan: An Improved Slacks-Based Measure Data Envelopment Analysis Approach

OBJECTIVE

To assess the change in efficiency and total factor productivity (TFP) of the local public hospitals in Japan after the local public hospital reform launched in late 2007, which was aimed at improving the financial capability and operational efficiency of hospitals.

DATA SOURCES AND DATA COLLECTION

Secondary data were collected from the Ministry of Internal Affairs and Communications on 213 eligible medium-sized hospitals, each operating 100-400 beds from FY2006 to FY2011.

STUDY DESIGN

The improved slacks-based measure nonoriented data envelopment analysis models (Quasi-Max SBM nonoriented DEA models) were used to estimate dynamic efficiency score and Malmquist Index.

PRINCIPAL FINDINGS

The dynamic efficiency measure indicated an efficiency gain in the first several years of the reform and then was followed by a decrease. Malmquist Index analysis showed a significant decline in the TFP between 2006 and 2011. The financial improvement of medium-sized hospitals was not associated with enhancement of efficiency. Hospital efficiency was not significantly different among ownership structure and law-application system groups, but it was significantly affected by hospital location.

CONCLUSIONS

The results indicate a need for region-tailored health care policies and for a more comprehensive reform to overcome the systemic constraints that might contribute to the decline of the TFP.

Should inpatients be adjusted by their complexity and severity for efficiency assessment? Evidence from Portugal

Hospital efficiency analysis depends largely on the model specifications. This study discusses the importance of the case-mix index (CMI) to homogenize the sample of inpatient discharges. It proposes a new index where they are classified by service, since it is usual to have lack of data to compute the CMI and this can influence the credibility of results. Data from the Portuguese national diagnosis-related group (DRG) database was utilized. Three different approaches are developed in this paper, based on locally convex order-m method as well as on translog functions. The first one correlates the efficiency with different inpatients weighting schemes, by using the Nadaraya-Watson method. The second approach compares different frontiers that have been computed using the different weighting schemes. Finally, by using bootstrap, the paper investigates whether the inclusion of severity/ complexity-related variables in the model statistically modifies the results. It has been shown that, under the Portuguese healthcare framework, if the model is environment corrected (which should include epidemiological and main political/ structural health reforms variables), then the severity adjustment of inpatients is pointless. The employment of an inpatient-weighting scheme, such as the CMI, may introduce significant frontier shift, thus its absence is not recommended in productivity evolution analyzes. The CMI shifts the efficiency frontier, but not the relative position of units against it (the last scenario if exogenous variables are present).

Efficiency improvements of public hospitals under a capitation payment scheme

In a context of cost containment and demands for better quality in public health care, payment systems are used as an instrument to promote efficiency improvements in service providers. Andalusia has adopted an original type of risk-adjusted capitation payment mechanism to reimburse public hospitals. This paper presents the main characteristics of the reimbursement mechanism of the Andalusian Health Service highlighting some differences with the mechanisms adopted in other parts of Europe. The paper also explores the evolution of the efficiency and quality of the hospitals after its implementation using the Malmquist index. Results indicate that hospitals have slightly improved their efficiency, particularly urban hospitals, and these improvements are not significantly related to a negative evolution of quality. However, it is not possible to assert to what extent, improvements are the consequence of the new payment system. The organisation of the Servicio Andaluz de Salud and the limited competition between hospitals reduce the effectiveness of the reform.

Analyzing the ambiguous relationship between efficiency, quality and patient satisfaction in healthcare services: the case of public hospitals in Turkey

OBJECTIVE

This paper empirically analyzes the effects of efficiency and structural quality on patient satisfaction in Turkish public hospitals. It also investigates the controversial relationship between hospital efficiency and structural quality for small, medium and large size hospitals in a comparative perspective.

METHODS

Data envelopment analysis (DEA) is used to analyze the efficiencies of hospitals. Data concerning 523 public hospitals is obtained from Turkish Ministry of Health. Due to the missing data of some hospitals, the sample of this study is composed of the remaining 348 observations. Multiple regression analysis is used to evaluate the relationship between patient satisfaction as a dependent variable and structural quality, hospital efficiency and institutional factors as independent variables. Furthermore, stepwise process multiple regression analysis is used to analyze the moderator effects of hospital efficiency on the form of the relationship between quality and satisfaction.

FINDINGS

The findings indicate that hospital efficiency changes the form of the relationship between structural quality and patient satisfaction as a moderator variable. The trade-off between quality and efficiency is found to vary depending on the hospital size. Negative correlation is found between quality and efficiency for small-size hospitals. However, positive correlation between efficiency and quality is found significant as indicated by Total Quality Management (TQM) approach for large-size hospitals. This study also provides the empirical evidence on the negative relationship between patient satisfaction and hospital size.

CONCLUSIONS

The effect of hospital efficiency on patient satisfaction might be improved for inefficient small and medium size hospitals by taking successful large hospitals as role models.

Cost efficiency of university hospitals in the Nordic countries: a cross-country analysis

This paper estimates cost efficiency scores using the bootstrap bias-corrected procedure, including variables for teaching and research, for the performance of university hospitals in the Nordic countries. Previous research has shown that hospital provision of research and education interferes with patient care routines and inflates the costs of health care services, turning university hospitals into outliers in comparative productivity and efficiency analyses. The organisation of patient care, medical education and clinical research as well as available data at the university hospital level are highly similar in the Nordic countries, creating a data set of comparable decision-making units suitable for a cross-country cost efficiency analysis. The results demonstrate significant differences in university hospital cost efficiency when variables for teaching and research are entered into the analysis, both between and within the Nordic countries. The results of a second-stage analysis show that the most important explanatory variables are geographical location of the hospital and the share of discharges with a high case weight. However, a substantial amount of the variation in cost efficiency at the university hospital level remains unexplained.

Substituting inpatient for outpatient care: what is the impact on hospital costs and efficiency?

Substitution of inpatient for outpatient care is seen as a means to increase patient throughput and control costs. The purpose of this study was to assess the impact of increased outpatient care on hospital costs and efficiency using Finnish specialty-level data from years 2003-2006 to which we applied stochastic frontier analysis. The results reveal that outpatient services have a smaller impact on total costs than inpatient services. At the same time, increased outpatient activity appears to have an adverse effect on estimated cost efficiency. This counterintuitive finding is probably due to the low weight given to outpatient activities by the Diagnosis Related Groups (DRG) system. A common weighting for inpatient and outpatient services is required in order to assess accurately the impact of outpatient care on efficiency.