Skip to main content
SpringerLink
Log in

Efficiency of Federal Hospitals in the United States

  • Published:
Journal of Medical Systems Aims and scope Submit manuscript

Abstract

This study evaluates the technical efficiency of federal hospitals in the United States using a variable returns to scale, input-oriented, data envelopment analysis (DEA) methodology. Hospital executives, health care policy-makers, taxpayers, and other stakeholders, benefit from studies that improve the efficiency of federal hospitals. Data for 280 federal hospitals in 1998 and 245 in 2001 were analyzed using DEA to measure hospital efficiency. Results indicate overall efficiency in federal hospitals improved from 68% in 1998 to 79% in 2001. However, based upon 2001 spending of $42.5 billion for federal hospitals potential savings of $2.0 billion annually are possible through more efficient management of resources. From a policy perspective, this study highlights the importance of establishing more specific policies to address inefficiency in the federal health care industry.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

REFERENCES

  1. Levit, K., Smith, C., Cowan, K., and Lazenby, H., Trends in U.S. Health Care Spending, 2001. Health Affairs 22(1):154–164, 2003.

    Google Scholar 

  2. GAO Report. Defense Department could save $300 million annually with pharmacy benefit management, GAO reports. Formulary (Cleve.) 33(10), 1998.

  3. Brown, L., Comparing health systems in four countries: Lessons for the United States. Am.J.Public Health (Wash.) 93(1):52–57, 2003

    Google Scholar 

  4. Perry, M. J., Toward a unified medical staffing model: Restoring order to a military system. In Final Report of the 67th Military Operations Research Society Symposium, June 1999.

  5. Griffiths, D., Implementing Quality With a Customer Focus, ASQC Quality Press, Milwaukee, WI, 1990.

    Google Scholar 

  6. Pink, G., Murray, M., and McKillop, I., Hospital efficiency and patient satisfaction. Health Serv.Manage.Res.(Lond.) 16(1):24–38, 2003.

    Google Scholar 

  7. Outlays for Health Programs—Table 16.1. Whitehouse Office of Management and Budget. Retrieved March 20, 2003, from www.whitehouse.gov/omb/budget/fy2004/hist.html, 2003.

  8. IHS—Indian Health Services. Health and Human Services' Indian Health Services Web-site Posting Budgets for Multiple Years. Budget for 2001 retrieved April 2, 2003, from www.ihs.gov/AdminMngrResources/Budget, 1998 and 2001.

  9. Wan, T. H. H., Evidence Based Health Care Management: Multivariate Modeling Approaches, Kluwer, Dordrecht, The Netherlands, 2002.

    Google Scholar 

  10. Grover, P., and Flagle, C., Operational efficiency research in the Department of Veterans Affairs health services. Health Serv.Res. 25(1):159–168, 1990.

    Google Scholar 

  11. Aday, L. A., Begley, C. E., Lairson, D. R., and Slater, C. H., Evaluating the Health Care System: Effectiveness, Efficiency, and Equity, 2nd edn., Health Administration Press, Chicago, 1998.

    Google Scholar 

  12. Grosskopf, S., The role of reference technology in measuring productive efficiency. Econ.J. 96:499–513, 1986.

    Google Scholar 

  13. Fare, R., Grosskopf, S., and Lovell, C., The Measurement of Efficiency of Production, Kluwer-Nijhoff Publishing, Boston, 1985.

  14. Gandjour, A., Kleinschmit, F., Littmann, V., and Lauterbach, K., An evidence-based evaluation of quality and efficiency indicators. Qual.Manage.Health Care 10(4):41–52, 2002.

    Google Scholar 

  15. White, K., and Ozcan, Y., Church ownership and hospital efficiency. Hosp.Health Serv.Adm. 41(3):297–310, 1996.

    Google Scholar 

  16. Helmig, B., and Lapsley, I., On the efficiency of public, welfare and private hospitals in Germany over time: A sectoral data envelopment analysis study. Health Serv.Manage.Res.(Lond.) 14(4):263–274, 2001.

    Google Scholar 

  17. Bowlin, W., Measuring performance: An introduction to Data Envelopment Analysis (DEA). J.Cost Account. Fall:3–27, 1998.

    Google Scholar 

  18. Nyhan, R., and Cruise, P., Comparative performance assessment in managed care: Data envelopment analysis for health care managers. Managed Care Q. 8(1):18–27, 2000.

    Google Scholar 

  19. Thanassoulis, E., Introduction to the Theory and Application of Data Envelopment Analysis.A Foun-dation Text With Integrated Software, Kluwer Academic Publishers, Boston, 2001.

    Google Scholar 

  20. Cooper, W., Seiford, M., and Tone, K., Data Envelopment Analysis, Kluwer Academic Publishers, Boston, 1999.

    Google Scholar 

  21. Farrell, M. J., The measurement of productive efficiency. J.Stat.Soc.Ser.A 120:253–281, 1958.

    Google Scholar 

  22. Charnes, A., Cooper, W. W., and Rhodes, E. L. Measuring the efficiency of decision-making units. Eur.J.Oper.Res. 2:429–444, 1978.

    Google Scholar 

  23. Sherman, D. H., Managing productivity of health care organizations. In Silkman, R. H. (ed.), Measuring Efficiency: An Assessment of Data Envelopment Analysis.NewDirections for Program Evaluation, No.32, Jossey-Bass, San Francisco, 1986.

    Google Scholar 

  24. Goldberg, M., Jaditz, T., and Johnson, V., Efficiency Analysis of Military Medical Treatment Facilities, Center for Navel Analysis Technical Report; CAB D000456.A2/Final October 2001.

  25. Assistant Secretary of Defense (Health Affairs), Program Budget and Evaluation Division, Skyline 5, Alexandria, Virginia (personal conversation, with Chief, PB&E, Feb. 25, 2002), 2002.

  26. Coppola, M. N., Correlates of Military Medical Treatment Facility (MTF) Performance: Measuring Technical Efficiency With the Structural Adaptation to Regain Fit (SARFIT) Model and Data En-velopment Analysis (DEA), A doctoral dissertation for a PhD in Health Service Organizations and Research, Virginia Commonwealth University, Richmond, VA, 2003.

  27. McKillop, D. G., Glass, J. C., Kerr, C. A., and McCallion, G. M., Efficiency of Northern Ireland hospitals: A non-parametric analysis. Econ.Soc.Rev. 30:2175–2196, 1999.

    Google Scholar 

  28. Thanassoulis, E., Boussofiane, A., and Dyson, R. G., Exploring output quality targets in the provi-sion of prenatal care in England using data envelopment analysis. Eur.J.Oper.Res. 80(3):588–607, 1995.

    Google Scholar 

  29. Athanassopoulos, A., and Chrysostomos, G., Assessing the technical and allocative efficiency of hospital operations in Greece and its resource implementation. Eur.J.Oper.Res. 133:416–431, 2001.

    Google Scholar 

  30. Giokas, D., Greek hospitals: How well their resources are used. Int.J.Manage.Sci. 29:73–83, 1999.

    Google Scholar 

  31. Barbetta, G., Turati, G., and Zago, A., On the Impact of Ownership Structure and Hospital Effi-ciency in Italy, Universita Cattolica di Milano, Isitito di Economia Finanza, Dipartmento di Scienze Economiche, Via Necchi 5, Milano 20123, Italy, 2001.

  32. Fried, H., Lovell, C., and Schmidt, S., The Measurement of Productive Efficiency: Techniques and Applications, Oxford University Press, New York.

  33. Ozcan, Y. A., and Bannick, R. R., Trends in Department of Defense Hospital Efficiency. J.Med.Syst. 18(2):69–83, 1994.

    Google Scholar 

  34. Wang, B., Ozcan, Y., Wan, T., and Harrison, J., Trends in hospital efficiency among metropolitan markets. J.Med.Syst. 23(2):83–97, 1999.

    Google Scholar 

  35. Lynch, J., and Ozcan, Y., Hospital closure: An efficiency analysis. Hosp.Health Serv.Adm. 39(2):205–220, 1994.

    Google Scholar 

  36. Copeland, T. E., and Weston, J. F., Financial Theory and Corporate Policy, Addison-Wesley, Reading, MA, 1988.

    Google Scholar 

  37. Lloyd, B., Creating Value Through Acquisitions, De-Mergers, Buyouts and Alliances, Pergamon, New York, 1997.

    Google Scholar 

  38. McCue, M., and Furst, R., Financial characteristics of hospitals purchased by investor-owned chains. Health Serv.Res. 21(4):515–527, 1986.

    Google Scholar 

  39. Alexander, J. A., and Morrisey, M. A., Hospital selection into multihospital systems, the effects of market, management and mission. Med.Care 26:159, 1988.

    Google Scholar 

  40. Bogue, R., Shortell, S., Sohn, M., Manheim, L., Bazzoli, G., and Chan, C., Hospital reorganization after merger. Med.Care 33(7):676–686, 1995.

    Google Scholar 

  41. Scott, R. W., The organization of medical care services: Toward an integrated model. Med.Care Rev. 50(3):271–301, 1993.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Health Administration Program, University of North Florida, College of Health, Jacksonville, Florida

    Jeffrey P. Harrison

  2. Virginia Commonwealth University, Richmond, Virginia

    M. Nicholas Coppola

  3. University of North Florida, Jacksonville, Florida

    Mark Wakefield

Authors
  1. Jeffrey P. Harrison
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. M. Nicholas Coppola
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Mark Wakefield
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Harrison, J.P., Coppola, M.N. & Wakefield, M. Efficiency of Federal Hospitals in the United States. Journal of Medical Systems 28, 411–422 (2004). https://doi.org/10.1023/B:JOMS.0000041168.28200.8c

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/B:JOMS.0000041168.28200.8c

Search

Navigation