Allocative efficiency vs technical efficiency in operating room management

Abstract

Pandit et al. [1] criticised our review of the inefficiency of use of operating room (OR) time [1] using multiple criteria predicated on ‘any chosen measure of efficiency’ meeting their criteria. There can be no one measure as there is price, scale, allocative, and technical efficiency [2]. Pandit et al. inappropriately compared a measure [2] of allocative efficiency with their measure of technical efficiency. Allocative efficiency is ‘the use of the optimal mix of inputs to produce the…services’[3]. Each hospital uses its relative cost of an hour of over-utilised vs regularly scheduled OR time to calculate its optimal hours of staffing for each specialty's cases [2]. Pandit's criticisms simply do not apply: firstly, the units of inefficiency (for example currency or time) are irrelevant, because the resulting staffing decisions are identical; secondly, comparisons among hospitals are inaccurate because each hospital knows its relative cost but not that of other hospitals; and, lastly, hospital size does not matter because only relative costs should contribute to the corresponding staffing decision. ‘Technical inefficiency exists when it is possible to produce more outputs with the inputs used’ and is commonly quantified using data envelopment analysis [3]. The caseload of each specialty at each hospital is a valid [4] and useful [5] end-point to determine if more workload for each specialty can be achieved at each hospital based on hospital and census data [6]. Results comparing scores of hospitals can be summarised in tabular and graphical format for managers [6, 7] and integrated into OR block time decisions [6, 8]. We challenge Pandit et al. to show corresponding validity [4, 6] and usefulness [5, 7, 8] of their measure of technical efficiency, their assumption of including homogeneity among specialties. They should also document that inclusion of cancellation rate does not result in poor statistical properties [9] and low reliability due to different hospital's definitions of cancellation. Dr Dexter is the Director of the Division of Management Consulting of the Department of Anesthesia of the University of Iowa. He receives no funds personally other than his salary from the State of Iowa, including no travel expenses or honoraria, and has tenure with no incentive program. Dr Watchel is President of Medical Data Applications, Ltd, which developed software used by the Division when it performs the analyses considered in the article critiqued by Pandit et al.