Measuring Hospital Performance in the Presence of Quasi-Fixed Inputs: An Analysis of Québec Hospitals |
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Authors: | Bilodeau Daniel Crémieux Pierre-Yves Jaumard Brigitte Ouellette Pierre Vovor Tsévi |
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Institution: | (1) Département des sciences économiques, Université du Québec à Montréal, Montréal, Canada;(2) Analysis Group, 111 Huntington, Boston, MA 02199, USA |
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Abstract: | This research proposes an approach to measure hospital performance based on a generalization of Banker and Morey (1986) and Førsund (1996). This approach considers quasi-fixed inputs explicitly, calculates their implicit cost, and quantifies returns to scale. The performance measure is decomposed into allocative and technical inefficiencies. Based on a very complete data set of Québec hospitals, we find that significant inefficiencies of up to 17% ($700 CAN million) could have been saved through improved performance. Postestimation analyses that include qualitative measures of care suggest that differences in performance are attributable to differences in management or unobservable quality of care rather than patient case mix. |
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Keywords: | hospital performance returns to scale implicit price quasi-fixed inputs allocative inefficiencies technical inefficiencies |
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