Improving productive efficiency in hospitals: findings from a review of the international evidence

Rumbold, Benedict; Smith, Judith; Hurst, Jeremy; Charlesworth, Anita; Clarke, Aileen

doi:10.1017/s174413311400022x

Cited by 25 publications

(22 citation statements)

References 53 publications

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“…The bed occupancy rate is the ratio of occupied to available hospital beds (e.g., Zuckerman, Hadley, & Iezzoni, 1994). We measure the rate of cancelled elective operations as the ratio of the number of cancelled elective operations for nonclinical reasons to the number of elective admissions (Rumbold, Smith, Hurst, Charlesworth, & Clarke, 2015). The reference cost index (RCI) compares a hospital's total costs with the national average total costs for the same HRGs.…”

Section: Efficiency Indicatorsmentioning

confidence: 99%

Do hospitals respond to rivals' quality and efficiency? A spatial panel econometric analysis

et al. 2017

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We investigate whether hospitals in the English National Health Service change their quality or efficiency in response to changes in quality or efficiency of neighbouring hospitals. We first provide a theoretical model that predicts that a hospital will not respond to changes in the efficiency of its rivals but may change its quality or efficiency in response to changes in the quality of rivals, though the direction of the response is ambiguous. We use data on eight quality measures (including mortality, emergency readmissions, patient reported outcome, and patient satisfaction) and six efficiency measures (including bed occupancy, cancelled operations, and costs) for public hospitals between 2010/11 and 2013/14 to estimate both spatial cross-sectional and spatial fixed-and random-effects panel data models. We find that although quality and efficiency measures are unconditionally spatially correlated, the spatial regression models suggest that a hospital's quality or efficiency does not respond to its rivals' quality or efficiency, except for a hospital's overall mortality that is positively associated with that of its rivals. The results are robust to allowing for spatially correlated covariates and errors and to instrumenting rivals' quality and efficiency. KEYWORDS competition, efficiency, hospitals, quality, spatial econometrics | INTRODUCTIONQuality and efficiency are fundamental goals for policymakers in the hospital sector. In the presence of fixed prices, policymakers have argued that competition may induce hospitals to compete on quality to attract patients and to enhance their efficiency (Gaynor, 2007). Investigations of the effect of competition on quality and efficiency in the United States, the U.K., and other Organization for Economic Cooperation and Development countries have produced mixed results (Section 1.1).In this study, rather than examining the relationship between measures of competition and hospital quality and efficiency, we use an alternative approach by examining hospitals' strategic interactions. For example, in a competitive environment, we may expect a hospital to respond to an increase in quality by a rival hospital by also increasing quality: in industrial economics terms, qualities are strategic complements. We present a simple theory model (Section 2) that shows that this intuition can be correct if treatment costs are increasing in quality. The reduction in demand that follows from an increase in rival's quality reduces total treatment cost of providing quality and at the margin incentivises the Received: 17 November 2016 Revised: 3 July 2017 Accepted: 4 July 2017 hospital to increase quality. There is however an offsetting effect: the reduction in demand also reduces incentives to contain cost that reduces the profit margin on additional patients. We therefore investigate empirically whether quality and efficiency are strategic complements or strategic substitutes so that higher rivals' quality (efficiency) induces a hospital to increase or reduce its quality (effic...

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Section: Efficiency Indicatorsmentioning

confidence: 99%

Do hospitals respond to rivals' quality and efficiency? A spatial panel econometric analysis

et al. 2017

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“…Productive efficiency in public hospitals is dependent on optimal combinations of skilled labour and capital so desired outputs are achieved within resources. 10,168 Australian public hospitals were found to be operating at an estimated 90% efficiency in the most detailed study of hospitals, but the value of capital cost per patient could only be estimated. 6,12 Dynamic efficiency…”

Section: Productive Efficiencymentioning

confidence: 99%

Is capital investment in Australian hospitals effectively funding patient access to efficient public hospital care?

Kerr

Hendrie

2018

Aust. Health Review

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This study asks 'Is capital investment in Australian public hospitals effectively funding patient access to efficient hospital care?' The study drew information from semistructured interviews with senior health infrastructure officials, literature reviews and World Health Organization (WHO) reports. To identify which systems most effectively fund patient access to efficient hospitals, capital allocation systems for 17 Organisation for Economic Cooperation and Development (OECD) countries were assessed. Australian government objectives (equitable access to clinically appropriate, efficient, sustainable, innovative, patient-based) for acute health services are not directly addressed within Australian capital allocation systems for hospitals. Instead, Australia retains a prioritised hospital investment system for institutionally based asset replacement and capital planning, aligned with budgetary and political priorities. Australian systems of capital allocation for public hospitals were found not to match health system objectives for allocative, productive and dynamic efficiency. Australia scored below average in funding patient access to efficient hospitals. The OECD countries most effectively funding patient access to efficient hospital care have transitioned to diagnosis-related group (DRG) aligned capital funding. Measures of effective capital allocation for hospitals, patient access and efficiency found mixed government-private-public partnerships performed poorly with inferior access to capital than DRG-aligned systems, with the worst performing systems based on private finance. Australian capital allocation systems for hospitals do not meet Australian government standards for the health system. Transition to a diagnosis-based system of capital allocation would align capital allocation with government standards and has been found to improve patient access to efficient hospital care. Very little is known about the effectiveness of Australian capital allocation for public hospitals. In Australia, capital is rarely discussed in the context of efficiency, although poor built capital and inappropriate technologies are acknowledged as limitations to improving efficiency. Capital allocated for public hospitals by state and territory is no longer reported by Australian Institute of Health and Welfare due to problems with data reliability. International comparative reviews of capital funding for hospitals have not included Australia. Most comparative efficiency reviews for health avoid considering capital allocation. The national review of hospitals found capital allocation information makes it difficult to determine 'if we have it right' in terms of investment for health services. Problems with capital allocation systems for public hospitals have been identified within state-based reviews of health service delivery. The Productivity Commission was unable to identify the cost of capital used in treating patients in Australian public hospitals. Instead, building and equipment depreciation plus the user cost of capital ...

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“…In this field, it is expected that public spending on health and social care to increase faster than the economic growth over the next 50 years, in line with recent trends across the OECD (Rumbold et al, 2015). Thus, healthcare systems must find ways of delivering health services at acceptable levels of quality, even with budgets that are growing more slowly than in the past decades.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Performance Through Efficiency in the Public Healthcare System – A DEA Approach in an Emergent Country

Nistor

Ştefănescu

Crișan

2017

Studia Universitatis Babes-Bolyai Oeconomica

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Abstract. Aiming to analyze the efficiency of the public sector, this paper enriches the literature by providing insights of the healthcare system for an emergent countryRomania. The empirical findings reached by applying the input orientated-variable return to scale (VRS) model of Data Envelopment Analysis (DEA) and Tobit regression method are determined on two key levels of the study. The Data Envelopment Analysis technique quantifies the efficiency within 20 representative hospitals located in the four administrative macro-regions, highlighting the ways of increasing efficiency, while the Tobit regression identifies the factors that influence the efficiency level. The results of the investigation allow for comparisons with other emerging countries, as efficiency has become an increasingly significant factor for public sector evolution. JEL classification: H41, I18, M40

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Improving productive efficiency in hospitals: findings from a review of the international evidence

Cited by 25 publications

References 53 publications

Do hospitals respond to rivals' quality and efficiency? A spatial panel econometric analysis

Do hospitals respond to rivals' quality and efficiency? A spatial panel econometric analysis

Is capital investment in Australian hospitals effectively funding patient access to efficient public hospital care?

Performance Through Efficiency in the Public Healthcare System – A DEA Approach in an Emergent Country

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