Abstract
The New Zealand public health sector has used DEA since 1997 to identify efficient expenditure levels to set prices for hospital services at the DRG level. Given the size of the expenditure (NZ$ 2.6 billion), considerable robustness was required for the results and sophistication of the models/process. While the model development and application appeared to be successful, politics overturned the results in the short run. In the longer term, the results have been shown to be reasonably robust and have become a base-line reference for future developments. As such, this paper reports a relatively successful transfer of theory into practice.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Agrell, P.J. and P. Bogetoft. (2001). “DEA-Based Regulation in Health Care Systems.” Paper presented at the XXI Spanish Congress of Health Economics, Oviedo, June 6–8.
Asmild, M., J.C. Paradi, V. Aggarwall, and C. Schaffnit. (2004). “Combining DEA Window Analysis with the Malmquist Index Approach in a Study of the Canadian Banking Industry.” Journal of Productivity Analysis 21(1), 67–89.
Australian Productivity Commission. (1997). Data Envelopment Analysis: A Technique for Measuring the Efficiency of Government Service Delivery. Industry Commission, Steering Committee for the Review of Government Service Provision Reports, November.
Barr, R.S., K.A. Killgo, T.F. Siems, and S. Zimmel. (2002). “Evaluating the Productive Efficiency and Performance of U.S. Commercial Banks.” Managerial Finance 28(9), 3–25.
Berger, A.N. and D.B. Humphrey. (1997). “Efficiency of Financial Institutions: International Survey and Directions for Future Research.” European Journal of Operational Research 98(2), 175–212.
Coelli, T., A. Estache, S. Perelman, and L. Trujillo. (2003). A Primer on Efficiency Measurement for Utilities and Transport Regulators. World Bank.
Cooper, W.W., L.M Seiford, E. Thanassoulis, and S.H. Zanakis. (2004). “DEA and Its Uses in Different Countries.” European Journal of Operational Research 154, 337–344.
Cooper, W.W., L.M. Seiford, and J. Zhu (eds). (2004). Handbook on Data Envelopment Analysis. Boston: Kluwer Academic Publishers.
Edvardsen, D.F. and F. Førsund. (2003). “International Benchmarking of Electricity Distribution Units.” The 23rd Arne Ryde Symposium, The Nordic Electricity Market, October 3–4, Lund, Sweden.
Ferrara, W.L. (1995). “Cost/Management Accounting: The 21st Century Paradigm.” Management Accounting (December), 30–36.
Fried, H.O., C.A.K. Lovell, S.S. Schmidt, and S. Yaisawarng. (2002). “Accounting for Environmental Effects and Statistical Noise in Data Envelopment Analysis.” Journal of Productivity Analysis 17(1/2), 157–174.
Gibbs, A., D. Fraser, and J. Scott. (1988). Unshackling the Hospitals: Report of the Hospitals and Related Services Taskforce. Government Print, Wellington.
Hill, H.T. (2000). “Adoption of Costing Systems in US Hospitals: An Event History Analysis 1980–1990.” Journal of Accounting and Public Policy, 19, 41–71.
Hollingsworth, B. (2003). “Non-Parametric and Parametric Applications Measuring Efficiency in Health Care.” Health Care Management Science 6(4), 203–218.
Hollingsworth, B. and J. Wildman. (2003). “The Efficiency of Health Production: Re-Estimating the WHO Panel Data using Parametric and Non-Parametric Approaches to provide additional information.” Health Economics 12, 493–504.
Jackson, T. (2001). “Using Computerised Patient-Level Costing Data for Setting DRG Weights: The Victorian (Australia) Cost Weight Studies.” Health Policy 56, 149–163.
Lauer, J.A., C.A.K. Lovell, C.J. Murray, and D.B. Evans. (forthcoming). “World Health System Performance Revisited.” BMC Health Services Research.
Norlander, N.O. and P. Roos. (1998). “Implementing the Malmquist Productivity Index: The Case of the National Corporation of Swedish Pharmacies.” Essay 4. In R. Färe, S. Grosskopf, and R.R. Russell. (eds). Index Numbers: Essays in Honour of Sten Malmquist, Kluwer Academic Press.
Office of Government and Commerce. (2002). Managing Successful Projects with PRINCE2. HM Treasury, London, United Kingdom.
Olesen, O.B. and N.S.C. Petersen. (2002). “The Use of Data Envelopment Analysis with Probabilistic Assurance Regions for Measuring Hospital Efficiency.” Journal of Productivity Analysis, 17, 83–109.
Ramanathan, K.V. (1985). “A Proposed Framework for Designing Management Control Systems for Not-For-Profit Organizations.” Financial Accountability & Management, 1(1), 75–92.
Richardson, J., J. Wildman, and I.K. Robertson. (2003). “A Critique of the World Health Organisation’s Evaluation of Health System Performance.” Health Economics, 12, 355–366.
Roos, P. (2003). “Measurement of Output of Electricity Distribution.” The 23rd Arne Ryde Symposium, The Nordic Electricity Market, October 3–4, Lund, Sweden.
Rouse, P., M. Putterill, and D. Ryan. (2002). “Integrated Performance Measurement Design: Insights from an Application in Aircraft Maintenance.” Management Accounting Research, 13, 229–248.
Sherman, H.D. and G. Ladino. (1995). “Managing Bank Productivity using Data Envelopment Analysis.” Interfaces, 25(2), 60–73.
Takamura, Y. and K. Tone. (2003). “A Comparative Site Evaluation Study for Relocating Japanese Government Agencies out of Tokyo.” Socio-Economic Planning Sciences, 37, 85–102.
Tavares, G. (in press). “A Bibliography of Data Envelopment Analysis.” Socio- Economic Planning Sciences.
World Health Organisation. (2000). The World Health Report: Health Systems Improving Performance. World Health Organisation, Geneva, Switzerland.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Rouse, P., Swales, R. Pricing public health care services using DEA: Methodology versus politics. Ann Oper Res 145, 265–280 (2006). https://doi.org/10.1007/s10479-006-0041-8
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10479-006-0041-8