Economic incentives and control: some issues for research in the VA hospital system

Within the field of economic research on hospital performance there are four major areas of need. These include the estimation of hospital cost functions, the development of new models of the nonprofit hospital, the development of better measures of hospital output, and an analysis of the determinants of hospital use. Within the Veterans Administration there exist a limited number of policy options to study or aim for in further research, but comparison between the system and other systems is possible and the prospective budgeting process in the VA should also be examined. Specific research can be directed at the case mix and the case-specific patterns of use in the VA system. The effects of the teaching requirements of the Va hospitals also can be more closely studied and the effects of physician and hospital characteristics on the length of stay of inpatients is an important question and may have implications for research outside the system. The potential data wealth of the VA Patient Treatment File and its centralized budgeting system can produce much useful research.