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Cost efficiency of US hospitals: a stochastic frontier approach
1School of Business Administration, Widener University, Chester, PA 19013, USA. michael.d.rosko@widener.edu
Abstract:
This study examined the impact of managed care and other environmental factors on hospital inefficiency in 1631 US hospitals during the period 1990-1996. A panel, stochastic frontier regression model was used to estimate inefficiency parameters and inefficiency scores. The results suggest that mean estimated inefficiency decreased by about 28% during the study period. Inefficiency was negatively associated with health maintenance organization (HMO) penetration and industry concentration. It was positively related with Medicare share and for-profit ownership status.
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