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Measuring hospital performance. A non-parametric approach.

S Grosskopf, V Valdmanis

    Journal of Health Economics
    |May 10, 1987
    PubMed
    Summary
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    This study introduces a new method to measure hospital efficiency, finding that ownership impacts performance. Public and non-profit hospitals show different efficiency frontiers, with public hospitals using fewer resources, potentially indicating variations in care quality.

    Area of Science:

    • Health Services Research
    • Operations Research
    • Health Economics

    Background:

    • Assessing hospital performance is crucial for healthcare management and policy.
    • Existing methods for measuring technical efficiency often have limitations regarding functional form, multiple inputs/outputs, and case-mix adjustments.

    Purpose of the Study:

    • To introduce and apply a novel technique for assessing the relative technical efficiency of hospitals.
    • To compare hospitals based on their productive performance and identify factors influencing efficiency, such as ownership.

    Main Methods:

    • Developed a non-parametric programming technique to construct a reference technology from observed inputs and outputs.
    • Assessed hospital efficiency relative to this frontier, allowing for multiple outputs and inputs to account for case-mix differences.

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  • Applied the technique to a sample of California hospitals.

    • Main Results:

    • The technique successfully yielded information on individual hospital productive performance without imposing a specific functional form.
    • Ownership was found to affect measured efficiency, with public and non-profit hospitals exhibiting distinct best practice frontiers.
    • Public hospitals appeared to utilize relatively fewer resources compared to other ownership types.

    Conclusions:

    • The introduced technique offers a flexible and informative approach to measuring hospital technical efficiency.
    • Ownership is a significant factor influencing hospital efficiency and resource utilization.
    • Observed differences in efficiency and resource use by ownership may reflect underlying variations in the quality of care provided.