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Measuring hospital efficiency: a comparison of two approaches
1H. Lee Moffitt Cancer Center and Research Institute, Cancer Control Moffitt Research Center, University of South Florida, Tampa 33612-9497, USA.
Health Services Research
|February 2, 2000
Summary
Data Envelopment Analysis (DEA) and stochastic frontier regression (SFR) models show similar industry-level hospital efficiency but differ on individual facility performance. Policymakers should await further research before adopting these models.
Area of Science:
- Health Services Research
- Econometrics
- Operations Research
Background:
- Evaluating hospital efficiency is crucial for resource allocation and quality improvement.
- Frontier models offer advanced methods for performance assessment in healthcare.
Purpose of the Study:
- To compare the efficiency scoring of hospital performance using Data Envelopment Analysis (DEA) and stochastic frontier regression (SFR) models.
- To assess the congruence and divergence of results from DEA and SFR in evaluating healthcare efficiency.
Main Methods:
- Utilized longitudinal financial records from Florida acute care hospitals (1982-1993).
- Developed and estimated comparable DEA and SFR models using a common set of input, output, and cost indicators.
- Analyzed efficiency indexes generated by both models to understand their policy implications.
Main Results:
- Both DEA and SFR models demonstrated convergent findings regarding overall industry-level hospital efficiency.
- Significant divergence was observed in the individual efficiency profiles of the most and least efficient hospitals between the two models.
- The choice of model impacts the characterization of specific hospital performance.
Conclusions:
- The selection of a frontier model significantly influences hospital efficiency assessments.
- Hospital policymakers should exercise caution and await further research to understand the discrepancies between DEA and SFR before integrating them into policy decisions.
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