Performance Measurement Using Data Envelopment Analysis (DEA)

The 1980s brought many challenges to hospitals as they attempted to improve the efficiency of health care delivery through the fixed pricing mechanism of diagnostic related groupings (DRGs). In the 1990s, the federal government extended the fixed pricing mechanism to physicians' services through resource based relative value schedule (RBRVS). Although these pricing mechanisms attempted to influence the utilization of services by controlling the amount paid to hospitals and professionals, effective cost control must also be accompanied by a greater understanding of variation in physician practice behavior and development of treatment protocols for various diseases.