Abstract
In national health services, where there is a tendency towards a lack of resources and a continuous increase in demand, it is necessary to implement decisions that promote efficiency. In this paper we focus on potential diversification economies as a strategy to increase efficiency levels.
We evaluate the change in efficiency in Catalan hospitals between 1987 and 1992, and analyse the presence of possible diversification economies in each hospital. We use Data Envelopment Analysis, which does not need information on either input or output prices.
The results are that the majority of hospitals could increase their efficiency and reduce their costs by diversification to the output-mix offered. Potential productivity gains are between 29% and 46%.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
J.C. Bedard, Use of Data Envelopment Analysis in accounting applications: evaluation and illustration by prospective hospital reimbursement, Doctoral Thesis, University of Wisconsin-Madison (1985).
J.F. Burgess Jr. and P.W. Wilson, Technical Efficiency in veterans administration hospitals, in: The Measurement of Productive Efficiency. Techniques and Applications (Oxford University Press, 1993) pp. 335–351.
Y. Calzado, T. García, J. Laffarga and M. Larrán, Relación entre eficiencia y efectividad en los hospitales del servicio andaluz de salud, Revista de Contabilidad 1(2) (1998) 49–83.
R.D. Charnes, W.W. Cooper and E. Rhodes, Measuring the efficiency of decision-making units, European Journal of Operational Research 2 (1978) 429–444.
J.A. Chilingerian and H.D. Sherman, Managing physician efficiency and efectiveness in providing hospital services, Health Services Management Research 3(1) (1990) 3–15.
A. Dor, The costs of Medicare patients in nursing homes in the United States: a multiple output analysis, Journal of Health Economics 8 (1989) 253–270.
R. Färe, Addition and efficiency, Quarterly Journal of Economics 101(4) (1986) 861–865.
M.J. Farrell, The measurement of productive efficiency, Journal of The Royal Statistical Society, series A 120 (1957) 253–281.
H.O. Fried, S.S. Schmidt and S. Yaisawarng, Economies of scope in US nursing homes, in: Atlantic Economic Conference, Philadelphia (October 1993).
B. Georgopoulos, Organizational Structure, Problem Solving and Effectiveness. A Comparative Study of Hospital Emergency Service (Jossey-Bass, 1986).
S.A. Kittelsen and F.R. Försund, Efficiency analysis of Norwegian district courts, Journal of Productivity Analysis 3(3) (1992) 277–306.
J. Magnussen, Efficiency differences in Norwegian hospitals. A nonparametric analysis, Annual Conference of the European Economic Association, Dublin (September 1992).
R. Murray, Measuring public-sector output: the Swendish report, in output measurement, in: The Service Sectors, ed. Z. Griliches (National Bureau of Economic Research, The University of Chicago Press, 1992) pp. 517–542.
J.C. Panzar and R.D. Willig, Economies of scope, American Economic Review 71(2) (1981) 268–272.
D. Prior, Technical efficiency and scope economies in hospitals, Applied Economics 78 (1996) 1295–1301.
D. Prior and M. Solà, La eficiencia de los hospitales de Cataluña: una comparación entre los hospitales pÚblicos y privados (Departament de Sanitat i Seguretat Social, Generalitat de Catalunya, 1993).
S. Ullman and G. Holtman, Economies of scope, ownership and nursing home costs, Quarterly Review of Economics and Business 25(4) (1985) 83–94.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Prior, D., Solà, M. Technical efficiency and economies of diversification in health care. Health Care Management Science 3, 299–307 (2000). https://doi.org/10.1023/A:1019070113893
Issue Date:
DOI: https://doi.org/10.1023/A:1019070113893