Abstract
The purpose of this paper is to provide a new,multiple output measure of plant capacity which we use to analyze the performance of hospitals in different competitive environments. To evaluate each hospital's plant capacity, we employ a nonparametric (linear programming) framework. The resulting measure of capacity can be determined from observed inputs and outputs and is based on the best practice performance of all hospitals in the sample. This methodology is closely related to Farrell-type measures of efficiency and, as a by-product, yields information on efficiency of individual hospitals. This technique imposes no prespecified functional form and allows for multiple outpus (to account for differences in case-mix). We apply this methodological approach to a sample of hospitals in Michigan. Our results are used to compare capacity utilization and efficiency of hospitals across different competitive environments.
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The refereeing process of this paper was handled by R. Kopp.
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Färe, R., Grosskopf, S. & Valdmanis, V. Capacity, competiton and efficiency in hospitals: A nonparametric approach. J Prod Anal 1, 123–138 (1989). https://doi.org/10.1007/BF00157792
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DOI: https://doi.org/10.1007/BF00157792