Comparing hospital cost efficiency between Norway and Finland

Abstract

In this study, cost efficiency in Finnish and Norwegian hospitals was compared using national discharge data and identical definitions for cost and output measures. Cross-sectional data on 47 Finnish and 51 Norwegian public hospitals in 1999 were used. Private, military and psychiatric hospitals were excluded. Data were collected from the National Discharge Registries. These were supplemented with cost information collected from hospitals’ year-end accounts. The output data included admissions grouped according to diagnosis related groups (DRGs), outpatient visits, day care and inpatient days. Net hospital operating costs excluding capital costs were used as input. Nonparametric data envelopment analysis (DEA) was used in the calculation of cost efficiency. The results revealed marked differences in efficiency, in both within country and across country comparisons. According to preliminary results there was more variation in cost efficiency among Finnish hospitals, and the average level of cost efficiency was 17–25% lower in Norwegian hospitals. Although these preliminary results must be taken with caution, this study demonstrates the importance and potential benefits of integrating cost efficiency analysis into international comparisons of health care expenditure.