A non-parametric investigation of supply side factors and healthcare efficiency in the U.S

Abstract

In this study, the supply-side factors affecting healthcare efficiency in the U.S are studied using data between 2010 and 2017. The recently developed non-parametric order-m estimator is used for the analysis. Results suggest that the U.S. has output production that is 87.6-percent of the expected maximum amount, with life expectancy being 3 years too short given healthcare spending and education levels. However, conditioning efficiency estimates on supply-side secondary environmental variables explains 34 to 85-percent of inefficiency found in the average county. This suggests that hospital expenditures are an inefficient mechanism to improve healthcare efficiency, while focus should be placed on the number and composition of healthcare personnel. Our results suggest that lack of access to care due to provider availability is the biggest impediment to timely and successful care, and that increasing the number of primary care providers or nurse practitioners will improve poor health outcomes in many counties. This suggests that healthcare providers are the main avenues to improve healthcare inefficiency on the supply side.