The Determinants of the Technical Efficiency of Acute Inpatient Care in Canada

To evaluate the technical efficiency of acute inpatient care at the pan-Canadian level and to explore the factors associated with inefficiency-why hospitals are not on their production frontier.

Canadian Management Information System (MIS) database (CMDB) and Discharge Abstract Database (DAD) for the fiscal year of 2012-2013.

We use a nonparametric approach (data envelopment analysis) applied to three peer groups (teaching, large, and medium hospitals, focusing on their acute inpatient care only). The double bootstrap procedure (Simar and Wilson 2007) is adopted in the regression.

Information on inpatient episodes of care (number and quality of outcomes) was extracted from the DAD. The cost of the inpatient care was extracted from the CMDB.

On average, acute hospitals in Canada are operating at about 75 percent efficiency, and this could thus potentially increase their level of outcomes (quantity and quality) by addressing inefficiencies. In some cases, such as for teaching hospitals, the factors significantly correlated with efficiency scores were not related to management but to the social composition of the caseload. In contrast, for large and medium nonteaching hospitals, efficiency related more to the ability to discharge patients to postacute care facilities. The efficiency of medium hospitals is also positively related to treating more clinically noncomplex patients.

The main drivers of efficiency of acute inpatient care vary by hospital peer groups. Thus, the results provide different policy and managerial implications for teaching, large, and medium hospitals to achieve efficiency gains.