303608
How efficient and inefficient hospitals differ
Preliminary analysis found that the average estimated cost-efficiency was 90.35%. Our analysis focuses on performance measures, characteristics and market variables of the top and bottom 100 hospitals as ranked by cost- efficiency(group means of 97.04% and 70.03%) . We found to the most efficient hospitals tended to have lower average costs ($11,094 vs. $30,610), use fewer employees (0.3342 vs. 0.5873), earned a higher operating margin (0.0979 vs. -0.2292). The most efficient group of hospitals tended to be non-teaching, for-profit, and members of multi-hospital systems. The least efficient hospitals had more academic medical centers, were publicly owned and much less likely to be a system-member. The highly efficient hospitals relied more on Medicare (45.19% of admissions vs. 38.54%) but less on Medicaid (20.65% vs 23.09%). Not consistent with expectations, hospitals in the most efficient group had a lower mean occupancy rate (59.27% vs. 67.20%) and were located in areas with a lower HMO penetration rate (18.55% vs 35.48%). The later result may be explained by a greater preference for HMOs in high-cost areas. The paper concludes with policy implications.
Learning Areas:
Biostatistics, economicsLearning Objectives:
Describe how performance varies in very efficient and very inefficient hospitals
Explain how stochastic frontier analysis can measure hospital efficiency
Discuss implications of correlates of high and low cost-efficiency on public policy
Keyword(s): Hospitals, Economic Analysis
Qualified on the content I am responsible for because: I am the principal investigator on this project. I have published over 5 papers using stochastic frontier analysis
Any relevant financial relationships? No
I agree to comply with the American Public Health Association Conflict of Interest and Commercial Support Guidelines, and to disclose to the participants any off-label or experimental uses of a commercial product or service discussed in my presentation.