Measuring Technical Inefficiency in Private and Public Hospitals Using Initial Treatment Methods

The debate over how to solve the problem of rising health care costs has produced a vast amount of literature in many different fields. In particular, economists have developed a method known as stochastic frontier analysis which can be used to estimate how inefficiencies within the health care industry can contribute to rising health care costs. Most studies of this nature estimate a best practice frontier focusing only on the long-run outcomes of hospitals, using variables such as patient days and mortality rates as proxies. In this study we approach the issue of hospital efficiency differently by estimating the best practice production frontier for the initial treatment of patients admitted for heart attack, heart failure, or pneumonia. We are particularly interested in analyzing what role (if any) hospital ownership plays in determining technical inefficiency. According to bureaucracy theory, it is hypothesized that non-profit and for-profit hospitals will exhibit greater efficiency relative to public hospitals. Our results reveal some evidence that private hospitals are in fact more efficient than public hospitals in two out of the three medical conditions analyzed.

並列關鍵字

technical efficiency ； stochastic frontier analysis ； hospital ownership ； quality of care

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