Can data envelopment analysis provide a scalar index of 'value'?

Area of Science:

• Health Economics
• Health Services Research
• Econometrics

Background:

• Healthcare value is often defined by cost and quality metrics.
• Current payment systems may treat cost and quality separately.
• Policymakers seek a single index to represent healthcare value.

Purpose of the Study:

• To investigate if data envelopment analysis (DEA) input efficiency correlates with lower costs and higher quality in physician practices.
• To assess the potential of input efficiency as a scalar measure for value-based payment systems.

Main Methods:

• Utilized 2008 US Medicare claims data from Colorado physician practices.
• Treated risk-adjusted cost as an input and multiple quality measures as outputs within a DEA framework.
• Examined the association between DEA input efficiency and combined cost-quality outcomes.

Main Results:

• Data envelopment analysis input efficiency was found to be associated with higher quality and lower cost.
• The findings indicate input efficiency can serve as a practical scalar measure of value.
• This metric could be valuable for developing value-based payment models for physicians.

Conclusions:

• Input efficiency derived from DEA presents a promising method for quantifying healthcare value.
• This approach offers a unified metric that integrates cost and quality dimensions.
• The study supports the use of input efficiency in designing future physician payment systems.