Should inpatients be adjusted by their complexity and severity for efficiency assessment? Evidence from Portugal

Abstract

Hospital efficiency analysis depends largely on the model specifications. This study discusses the importance of the case-mix index (CMI) to homogenize the sample of inpatient discharges. It proposes a new index where they are classified by service, since it is usual to have lack of data to compute the CMI and this can influence the credibility of results. Data from the Portuguese national diagnosis-related group (DRG) database was utilized. Three different approaches are developed in this paper, based on locally convex order-m method as well as on translog functions. The first one correlates the efficiency with different inpatients weighting schemes, by using the Nadaraya-Watson method. The second approach compares different frontiers that have been computed using the different weighting schemes. Finally, by using bootstrap, the paper investigates whether the inclusion of severity/ complexity-related variables in the model statistically modifies the results. It has been shown that, under the Portuguese healthcare framework, if the model is environment corrected (which should include epidemiological and main political/ structural health reforms variables), then the severity adjustment of inpatients is pointless. The employment of an inpatient-weighting scheme, such as the CMI, may introduce significant frontier shift, thus its absence is not recommended in productivity evolution analyzes. The CMI shifts the efficiency frontier, but not the relative position of units against it (the last scenario if exogenous variables are present).

The Determinants of the Technical Efficiency of Acute Inpatient Care in Canada

“…In this study, we use a nonparametric approach known as DEA to estimate a production frontier and the distance of each hospital to the frontier. DEA is one of the two main methods used to estimate hospital technical or cost efficiency (Bilodeau, Cremiedx, and Quellette ; Varabyova and Schreyögg ; Chowdhury and Zelenyuk ; Ferreira and Marques ). The main advantage of the DEA approach in the present case is that it allows for the estimation of frontiers for multi‐outputs; in the case of inpatient acute care, we want to account for the quality as well as the quantity of stays a hospital produces (see below, subsection “outputs”), because it reflects the dilemma governments face: How can we reduce wait‐times without jeopardizing quality?…”

Efficiency in chronic illness care coordination: public-private collaboration models vs. traditional management

“…This approach presents several advantages over other conventional nonparametric approaches that have been traditionally applied in this framework such as the two-stage approaches. Furthermore, this approach has been rarely applied in the health care setting [19][20][21] and even less to analyze the performance of hospitals, although there are a few exceptions [22,23]. Therefore, from a methodological point of view, this article also has a clear innovative character.…”

Optimizing payments based on efficiency, quality, complexity, and heterogeneity: the case of hospital funding

“…External conditions impacting on hospital performance are expected to play a meaningful role on funding, as does the complexity of treated patients. Ferreira and Marques (2016b) verify that these two concepts are related in practice. Recalling the fact that the precision matrix accounts for the relationship between variables, we may enjoy such a property and construct a single comparability subset based on both environment and complexity.…”