Relative Productivity of For-Profit Hospitals: A Big or a Little Deal?

This study asks: Does the empirical evidence support the conclusion that for-profit (FP) hospitals are more productive or efficient than private not-for-profit (NFP) hospitals or non-federal public (PUB) hospitals? Alternative theories of NFP behavior are described. Our review of individual empirical hospital studies of quality, service mix, community benefit, and cost/efficiency in the United States published since 2000 indicates that no systematic difference exists in cost/efficiency, provision of uncompensated care, and quality of care. But FPs are more likely to provide profitable services, higher service intensity, have lower shares of uninsured and Medicaid patients, and are more responsive to external financial incentives. That FP hospitals are not more efficient runs counter to property rights theory, but their relative responsiveness to financial incentives supports it. There is little evidence that FP market presence changes NFP behaviors. Observed differences between FP and NFP hospitals are mostly a "little deal."

Productivity change and its driving forces in Chinese healthcare sector.

Since the last medical reform in 2009, China's public hospitals have been facing the changes in the institutional environment. However, the effects of reforms have not been received enough attention to deliver evidence-based implications. In this paper, we first assess the efficiency of regional public hospitals from 2011 to 2018, employing a proposed method based on an additive indicator and an aggregate directional distance function (DDF). The method applied allows for decomposing total factor productivity (TFP) indicator into three components, including technical efficiency change (TEC), total productivity (TP) and scale efficiency change (SEC). Second, following the efficiency assessment, we carry post-efficiency analysis to identify the determinants of efficiency of the public hospitals. The results show that annual average TFP growth rate is 1.38%, which is driven mainly by TEC. Regional disparities of public hospitals' performance are expanding. Almost 75% of the regions considered show a positive TFP growth. The regression results show that the significant determinants of efficiency of regional public hospitals include the price of and demand for health services.

Biased technical change in hospital care and the demand for physicians.

BACKGROUND: The development of labour productivity is relevant for accurately planning future staffing requirements, especially in sectors where technological developments may drive labour substitution. The present study investigates how labour productivity has developed across Dutch medical specialists (2007-2017) and discusses its implications for workforce planning, also in relation to the existing literature. METHODS: A regression model is developed in which the number of full-time equivalents is related to production (admissions), hospital characteristics and a trend parameter. The trend parameter captures the average annual change in the number of full-time equivalents per production output and is a measure for labour productivity. The model is applied to a micro-data set of Dutch hospitals in the period 2007-2017 across 24 different specialties using regression methods. RESULTS: The results indicate an increase in the number of full-time equivalents per admission has increased for most specialisms and that labour productivity has thus decreased. However, there is considerable heterogeneity and uncertainty across different specialisms. CONCLUSIONS: The results amplify the issue of medical personnel shortages driven by the growing demand for health care. The research outcomes are linked to the existing literature regarding physicians' productivity. Changes in accountability such as using relative value units, incentive payments, use of staff and mid-level providers, and technology have been discussed, and some consensus has been reached.

Identifying the contribution to hospital performance among Chinese regions by an aggregate directional distance function.

In this paper, we examine efficiency and total factor productivity for hospitals operating in China between the years of 2009-2016. Given reforms in China focusing on the hospital sector, it has been demonstrated that efficiency and productivity are important in meeting the overall objective of meeting more accessibility to hospital care for the population. Measuring an aggregate directional distance function is in itself a non-parametric approach, we report on the decomposition of hospital performance and found that between 2009 and 2010, technical inefficiency (using resources inefficiently) dominated overall inefficiency but beyond 2011-2016, mix inefficiency (misallocation of resources) was higher. Furthermore, an additive total factor productivity (TFP) indicator is proposed to capture contributions of individual provincial (or group) hospital performance to the total productivity gain. We also report that mix inefficiency had growth throughout this time period indicating a catching up in the correct mix of inputs. This finding is worth following as hospital reform in China also focuses on utilizing the right labor and capital mix in producing efficient care.

A robust analysis of hospital efficiency and factors affecting variability.

The objectives of this paper are to use data envelopment analysis to measure hospital inefficiency in a way that accounts for patient outcomes and to study the association between organizational factors, such as hospital-physicians integration level and teaching status, and market competition with hospital inefficiency. We apply the robust data envelopment analysis approach to a sample of private (both not-for-profit and for-profit) hospitals operating in the United States. Our data envelopment analysis model includes mortality and readmission rates as bad outputs and admissions, surgeries, emergency room, and other visits as good outputs. Therefore, our measurement of hospital inefficiency accounts for quality. We then use a subsampling regression analysis to determine the predictors of hospital inefficiency. For-profit, fully integrated and teaching hospitals were more efficient than their counterparts. Also hospitals located in more competitive markets were more efficient than those located in less competitive markets. Incorporating quality in the measurement of hospital efficiency is key for producing valid efficiency scores. Hospitals in less competitive markets need to improve their efficiency levels. Moreover, high levels of hospital physician integration might be instrumental in ensuring that hospitals achieve their efficiency goals.

Work Impact and Emotional Stress Among Informal Caregivers for Older Adults.

OBJECTIVES: With the growing aging population and reliance on informal caregivers in the United States, many individuals will take on the role of caregiver as an adult. We examined whether informal caregivers experience work interference or a change in work status (i.e., retiring/quitting) due to caregiving. We also explored whether experiencing work interference or a change in work status was associated with greater emotional stress. METHOD: This secondary analysis is drawn from the Fifth National Survey of Older Americans Act (OAA) program participants, which included 1,793 family caregivers. The present analysis is on caregivers of working age (18-64 years) providing care to another adult, which included 922 caregivers. Ordinal logit models were used to assess associations between experiencing work interference or a change in work status and emotional stress. Study weights were applied for all analyses. RESULTS: At the time of the survey, more than half (52.9%) of caregivers were employed full- or part-time. Among nonworking caregivers (i.e., not working or retired) at the time of the survey, 39.8% responded that they had quit or retired early due to caregiving demands. Among employed caregivers, 52.4% reported that informal caregiving had interfered with their employment. Importantly, those respondents who reported work interference or a change in work status were more likely to report higher levels of emotional stress associated with caregiving demands. DISCUSSION: These findings suggest the need to further explore work among informal caregivers and associations with emotional stress, as well as consider work-based policy approaches, organizational and/or societal, to support informal caregivers.

Concentrating Emergency Rooms: Penny-Wise and Pound-Foolish? An Empirical Research on Scale Economies and Chain Economies in Emergency Rooms in Dutch Hospitals.

In this paper, we address the issue of whether it is economically advantageous to concentrate emergency rooms (ERs) in large hospitals. Besides identifying economies of scale of ERs, we also focus on chain economies. The latter term refers to the effects on a hospital's costs of ER patients who also need follow-up inpatient or outpatient hospital care. We show that, for each service examined, product-specific economies of scale prevail indicating that it would be beneficial for hospitals to increase ER services. However, this seems to be inconsistent with the overall diseconomies of scale for the hospital as a whole. This intuitively contradictory result is indicated as the economies of scale paradox. This scale paradox also explains why, in general, hospitals are too large. There are internal (departmental) pressures to expand certain services, such as ER, in order to benefit from the product-specific economies of scale. However, the financial burden of this expansion is borne by the hospital as a whole. The policy implications of the results are that concentrating ERs seems to be advantageous from a product-specific perspective, but is far less advantageous from the hospital perspective. © 2016 The Authors. Health Economics Published by John Wiley & Sons, Ltd.

Assessing overall, technical, and scale efficiency among home health care agencies.

While home health care agencies (HHAs) play a vital role in the production of health, little research has been performed gauging their efficiency. Employing a robust approach to data envelopment analysis (DEA) we assessed overall, technical, and scale efficiency on a nationwide sample of HHAs. After deriving the three efficiency measures, we regressed these scores on a variety of environmental factors. We found that HHAs, on average, could proportionally reduce inputs by 28 % (overall efficiency), 23 % (technical efficiency) and 6 % (scale efficiency). For-profit ownership was positively associated with improvements in overall efficiency and technical efficiency and chain ownership was positively associated with global efficiency. There were also state-by-state variations on all the efficiency measures. As home health becomes an increasingly important player in the health care system, and its share of national health expenditures increases, it has become important to understand the cost structure of the industry and the potential for efficiencies. Therefore, further research is recommended as this sector continues to grow.

Care Appropriateness and Health Productivity Evolution: A Non-Parametric Analysis of the Italian Regional Health Systems.

BACKGROUND: There has been increasing interest in measuring the productive performance of healthcare services since the mid-1980s. OBJECTIVE: By applying bootstrapped data envelopment analysis across the 20 Italian Regional Health Systems (RHSs) for the period 2008-2012, we employed a two-stage procedure to investigate the relationship between care appropriateness and productivity evolution in public hospital services. METHODS: In the first stage, we estimated the Malmquist index and decomposed this overall measure of productivity into efficiency and technological change. In the second stage, the two components of the Malmquist index were regressed on a set of variables measuring per capita health expenditure, care appropriateness, and clinical appropriateness. RESULTS: Malmquist analysis shows that no gains in productivity in the health industry have been achieved in Italy despite the sequence of reforms that took place during the 1990s, which were devoted to increasing efficiency and reducing costs. Analysis of the efficiency change index clearly indicates that the source of productivity gain relies on a rationalization of the employed inputs in the Italian RHSs. At the same time, the trend of the technological change index reveals that the health systems in the three macro-areas (North, Central, and South) are characterized by technological regress. CONCLUSION: Overall, our results suggest that productivity increases could be achieved in the Italian health system by reducing the level of inputs, improving care and clinical appropriateness, and by counteracting the 'DRG (diagnosis-related group) creep' phenomenon.

Opportunities for Prevention: Assessing Where Low-Income Patients Seek Care for Preventable Coronary Artery Disease.

The Affordable Care Act has many aspects that are aimed at improving health care for all Americans, including mandated insurance coverage for individuals, as well as required community health needs assessments (CHNAs), and reporting of investments in community benefit by nonprofit hospitals in order to maintain tax exemptions. Although millions of Americans have gained access to health insurance, many--often the most vulnerable--remain uninsured, and will continue to depend on hospital community benefits for care. Understanding where patients go for care can assist hospitals and communities to develop their CHNA and implementation plans in order to focus resources where the need for prevention is greatest. This study evaluated patient care-seeking behavior among patients with coronary artery disease (CAD) in Florida in 2008--analyzed in 2013--to assess whether low-income patients accessed specific safety net hospitals for treatment or received care from hospitals that were geographically closer to their residence. This study found evidence that low-income patients went to hospitals that treated more low-income patients, regardless of where they lived. The findings demonstrate that hospitals-especially public safety net hospitals with a tradition of treating low-income patients suffering from CAD-should focus prevention activities where low-income patients reside.

Public health capacity in the provision of health care services.

In this paper, we assess the capacity of Florida's public health departments. We achieve this by using bootstrapped data envelopment analysis (DEA) applied to Johansen's definition of capacity utilization. Our purpose in this paper is to measure if there is, theoretically, enough excess capacity available to handle a possible surge in the demand for primary care services especially after the implementation of the Affordable Care Act that includes provisions for expanded public health services. We measure subunit service availability using a comprehensive data source available for all 67 county health departments in the provision of diagnostic care and primary health care. In this research we aim to address two related research questions. First, we structure our analysis so as to fix budgets. This is based on the assumption that State spending on social and health services could be limited, but patient needs are not. Our second research question is that, given the dearth of primary care providers in Florida if budgets are allowed to vary is there enough medical labor to provide care to clients. Using a non-parametric approach, we also apply bootstrapping to the concept of plant capacity which adds to the productivity research. To preview our findings, we report that there exists excess plant capacity for patient treatment and care, but question whether resources may be better suited for more traditional types of public health services.

Technology diffusion in hospitals: a log odds random effects regression model.

This study identifies the factors that affect the diffusion of hospital innovations. We apply a log odds random effects regression model on hospital micro data. We introduce the concept of clustering innovations and the application of a log odds random effects regression model to describe the diffusion of technologies. We distinguish a number of determinants, such as service, physician, and environmental, financial and organizational characteristics of the 60 Dutch hospitals in our sample. On the basis of this data set on Dutch general hospitals over the period 1995-2002, we conclude that there is a relation between a number of determinants and the diffusion of innovations underlining conclusions from earlier research. Positive effects were found on the basis of the size of the hospitals, competition and a hospital's commitment to innovation. It appears that if a policy is developed to further diffuse innovations, the external effects of demand and market competition need to be examined, which would de facto lead to an efficient use of technology. For the individual hospital, instituting an innovations office appears to be the most prudent course of action.

Healthcare reform in Italy: an analysis of efficiency based on nonparametric methods.

Over the past twenty years, important changes in the Italian health system have led to different approaches in organizing, delivering and financing health services throughout the country's regions. In this paper, we assess the impacts that such changes have had on health efficiency. The analysis performed here is in two stages. In the first stage, healthcare efficiency is measured via bootstrapped Data Envelopment Analysis. In the second stage, the impacts of organizational and environmental variables on efficiency are investigated. Our results highlight that the organizational model adopted by the Lombardia region allows for the best results in healthcare efficiency in Italy. A process of administrative decentralization from the regional governments to local health units appears to be a source of inefficiency. Finally, patient mobility has a significant impact on healthcare efficiency.

Renovating Charity Hospital or building a new hospital in post-Katrina New Orleans: economic rationale versus political will.

Since September 2005, Charity Hospital of New Orleans has been closed due to Hurricane Katrina. A debate following the closing arose about whether this public hospital should be renovated or a new medical center affiliated with the Louisiana State University should be built. Using academic literature, government statistics, and popular press reports, we describe the economic implications that support the view that Charity Hospital should have been renovated. We also address why this policy was not pursued by demonstrating the influence politics and individual stakeholders (specifically, Louisiana State University) had on the eventual policy pursued. In this commentary we also note the political identity movement away from public-sector provision of services to private-sector interests.

Response to modeling and notation of DEA with strong and weak disposable outputs.

In this brief communiction we respond to comments on our earlier publication, which contained some notational errors.

Social efficiency of hospital care delivery: frontier analysis from the consumer's perspective.

The efficiency of hospital services and patients' access to hospitals are both important health care policy issues. In the past, research has relied on studying these topics separately. In this article, we measure both efficiency and access at the same time using data envelopment analysis (DEA). By including both the technically efficient use of resources, as well as the patients' travel distances, we found increases in social efficiency when patients' travel distances were taken into account. When compared with patients with nonurgent conditions, we found that patients suffering from conditions requiring urgent attention were treated at closer hospitals, increasing the social efficiency. Insurance coverage and hospital ownership were also examined. Our findings corroborated past literature in the hospital and travel distance literature and set out a framework for future research. Perhaps most important, we demonstrate the techniques needed to incorporate broader measures of social costs into studies of hospital efficiency.

Measuring economies of scale at the city market level.

Data envelopment analysis (DEA) techniques have been applied to the assessing efficiency and productivity among individual hospitals. In this article, we employ DEA to address whether economies of scale exist among hospital markets by first assessing individual hospitals operating in 2005 in the State of Florida and then by comparing hospital markets' efficiency relative to each other. The interest in hospital markets stems from issues relating to mergers among hospitals or the reallocation of services (inputs) among hospitals in a market area, particularly as occupancy rates and reimbursements are tending to fall. Facing more competition and stringent financial conditions, hospitals would benefit from decreasing costs by exploiting economies of scale.

Environmental factors and productivity on Dutch hospitals: a semi-parametric approach.

This paper describes the efficiency of Dutch hospitals using the method of Data Envelopment Analysis (DEA). In particular the analysis focuses on explaining cost inefficiency measures due to each hospital's operating environment. In previous works, the resulting DEA score is regressed on environmental factors via a Tobit approach. Previously, these approaches have been used (Simar and Wilson, J Prod Anal 7(1):63-80, 2000) but later these authors (Simar and Wilson 2007) demonstrated that bias is incurred since the efficiency score is a point estimate without a probability distribution around it that is required by the Tobit methodology. In this paper we use the Simar and Wilson bootstrapping techniques in order to obtain more efficient estimates of the environmental effects. It is shown that differences in estimated effects exist between the non-bootstrapped and bootstrapped models.

The impact of CON regulation on hospital efficiency.

In this paper we propose an empirically implementable measure of aggregate-level efficiency along the lines of Debreu's (1951) coefficient of resource utilization but restricted to the production side. The efficiency measure is based on directional distance functions, which allows the overall measure of efficiency to be decomposed into measures of technical and "structural" efficiency. The latter measure, which captures inefficiencies associated with the organization of production within an industry, is further decomposed into measures of scale and mix efficiency. The measures developed in the paper are illustrated using U.S. hospital data. The illustration sheds light on the efficacy of certificate of need (CON) regulations.