Measuring hospital output: A review of the service mix and case mix approaches

Abstract

This paper presents a survey of the literature on the definition and measurement of hospital output concentrating on those studies that have used either ‘service-mix’ or ‘case-mix’ as their basic output measure. The service-mix approach is described as a supply side analysis in which the nature of a hospital's output is determined by the character and range of its facilities and services. In contrast, the case-mix approach is essentially a demand side analysis which regards each hospital's case load as being determined by the needs and demands of the population served, with facilities and services the dependent variables. It is also argued that hospital output measurement has rarely been tackled directly. Typically such work has been secondary to the principle research objectives which have related to the study of hospital cost structure and economies of scale. The units developed have been, for the most part, partial measures which satisfy the requirements of their particular investigators but which, until recently, have had little potential for wider application. The call for more effective cost control in health care through reimbursement systems and review procedures, particularly in the United States, has led to an upsurge of interest in hospital output measurement and to a consequent improvement in techniques.