Hospital Cost Efficiency Research Articles

Agglomeration and Cost Economies for Washington State Hospital Services

Abstract Hospital cost efficiency is dependent on the potential to generate cost economies, which imply lower costs for hospitals that are, for example, larger or more diversified. Although scale and scope economies have been recognized in the literature on hospital costs, agglomeration economies due to hospital clustering have received little attention. We consider the impact of such spatial linkages, which may result from labor pooling or knowledge spillovers, by including a measure of other hospitals' proximity in a flexible cost function model. We find significant agglomeration economies for the Washington State hospitals in our dataset; geographic concentration appears to reduce costs for most treatment centers. We also find significant scale economies, and some evidence of scope economies from complementarities between outputs and among treatment centers.

Patient flow in the preoperative assessment clinic

Previous research has shown that a preoperative assessment clinic enhances hospital cost-efficiency. However, the differences in organization of the patient flow have not been analysed. In this descriptive study, we evaluated the consequences of the organization of the patient flow of a preoperative assessment clinic on its performance, by analysing two Dutch university hospitals, which are organized essentially differently. In the final analysis, the study included 880 patients who visited either academic centre. The performance of the two preoperative assessment clinics was evaluated by measuring patient flow time, various procedure times and the total waiting time. Patients' age, ASA physical status and any preoperative tests requested by the physician were also recorded. There was a significant difference in patient flow time between the two preoperative assessment clinics. More time was needed for the preoperative assessment when patients' ASA class was higher. The patient flow time was longer when electrocardiogram and venepuncture were performed at the general outpatient laboratory than when they were performed at the preoperative assessment clinic due to longer waiting times. More tests were requested when they were performed at the preoperative assessment clinic. This study shows that the organization of patient flow is an important aspect of the logistic processes of the preoperative assessment clinic. It might influence patient flow times as well as the number of preoperative tests requested. Together with other aspects of logistic performance, patient satisfaction and quality of medical assessment, patient flow logistics can be used to assess the quality of a preoperative assessment clinic.

The Effect of IT Capital on Hospital Efficiency

The academic literature on hospital information technology is relatively sparse despite its important implications for hospital management, with only limited empirical evidence linking implementation of hospital IT systems with improvements in health care quality, financial and operational performance. This study aims to corroborate the observational evidence by using a cost function estimation approach to examine the impact of IT capital investments on hospital cost efficiency.

Comparison of Hospital Costs and Length of Stay for Community Internists, Hospitalists, and Academicians

BACKGROUNDThe model of inpatient medical management has evolved toward Hospitalists because of greater cost efficiency compared to traditional practice. The optimal model of inpatient care is not known.OBJECTIVETo compare three models of inpatient Internal Medicine (traditional private practice Internists, private Hospitalist Internists, and Academic Internists with resident teams) for cost efficiency and quality at a community teaching hospital.DESIGNSingle-institution retrospective cohort study.MEASUREMENTS AND MAIN RESULTSMeasurements were hospital cost, length of stay (LOS), mortality, and 30-day readmission rate adjusted for severity, demographics, and case mix. Academic Internist teams had 30% lower cost and 40% lower LOS compared to traditional private Internists and 24% lower cost and 30% lower LOS compared to private Hospitalists. Hospital mortality was equivalent for all groups. Academic teams had 2.3–2.6% more 30-day readmissions than the other groups.CONCLUSIONSAcademic teams compare favorably to private Hospitalists and traditional Internists for hospital cost efficiency and quality.

Can we use routine data to evaluate organizational change? Lessons from the evaluation of business process re-engineering in a UK teaching hospital

To review and critically evaluate a multidisciplinary independent evaluation of business process re-engineering within a UK hospital using routine data. Routine data measures of hospital cost efficiency are used to compare rates of changes at Leicester Royal Infirmary (LRI) with a 'peer group' of 22 teaching hospitals and to ascertain changes attributable to re-engineering. Different adjustment factors are quantified and the robustness of individual measures discussed. In addition to providing context to the quantitative primary research and the qualitative research on change management, service performance and quality indicators not captured in overall efficiency measures are assessed using detailed routine data measures. LRI is one of the most efficient teaching hospitals in England and continued improvement during re-engineering is shown to be at a faster rate than the peer group average, although attribution of changes is difficult. Lack of availability and inconsistency of data for support services meant that many re-engineering initiatives are not quantifiable using routine data measures. When combining different measures, routine data is a valuable tool in evaluating organizational change initiatives. However, use in future evaluations would require consistent benchmarking of routine data.

Comparing hospital cost efficiency between Norway and Finland

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.

Efficiency outcomes of market concentration and managed care

The paper examines how hospital cost efficiency has reacted to extensive horizontal integrations of hospitals and rapid growth of managed care in the US health care industry. Cost efficiency is estimated by using panel data approaches to relax the assumptions for the hospital effects imposed in earlier studies. The paper shows that higher managed care penetration over time is associated with greater hospital efficiency, and higher market concentration is positively associated with efficiency when markets are highly competitive or highly concentrated.

Hospital cost efficiency and system membership.

Using a recently developed taxonomy of hospital organizations, this paper estimates a stochastic frontier cost function to test for inefficiency differences among system hospitals having common strategic and/or structural characteristics. System hospitals that centralized around physician arrangements and insurance products display the smallest deviations from the least cost locus. This suggests efficiency benefits from organization of physician and insurance activities at the system level, with discretion over the array of service offerings left to individual members. Policymakers should be mindful of potential efficiency gains from hospital consolidations and be aware that common ownership alone may be too general a rubric for evaluating those gains usefully.

Measuring hospital cost efficiency with panel data models.

This paper investigated the development of hospital cost efficiency and productivity in Finland in 1988-1994 using a comparative application of parametric and non-parametric panel models. Stochastic cost frontier models with a time-varying inefficiency component were used as parametric methods. As non-parametric methods various DEA models were employed to calculate efficiency scores and the Malmquist productivity index. The results revealed a 3-5% annual average increase in productivity, half of which was due to improvement in cost efficiency and half due to technological change. The results by parametric and non-parametric methods compared well with respect to individual efficiency scores, time-varying efficiency and technological change. The state subsidy reform of 1993 did not seem to have any observable effects on the hospital efficiency.