Skip to main content

Advertisement

SpringerLink
Log in

An analysis of hospital efficiency and productivity growth using the Luenberger indicator

  • Published:
Health Care Management Science Aims and scope Submit manuscript

Abstract

We analyze hospital efficiency and productivity growth using an innovative approach which employs the directional distance function and the Luenberger productivity indicator. The primary advantage of our approach is that both input contractions and output expansions are considered. Our model generates a productivity indicator that is decomposed into the usual constituents of productivity growth: technological change and efficiency change. For the sake of comparison, we also use the Malmquist productivity index. The empirical results based on a sample of Portuguese hospitals from 1997 to 2004 show that, on average, those hospitals experienced very weak productivity growth over that period. In addition, the incidence of technological change was remarkably low.

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

Fig. 1

Similar content being viewed by others

References

  1. Boussemart JP, Briec W, Kerstens K, Poutineau JC (2003) Luenberger and Malmquist productivity indices: theoretical comparisons and empirical illustrations. Bull Econ Res 55:391–405

    Article  Google Scholar 

  2. Hollingsworth B, Street A (2006) The market for efficiency analysis of health care organizations. Health Econ 15:1055–1059

    Article  Google Scholar 

  3. Carreira C (1999) Economias de escala e de gama nos hospitais públicos Portugueses: Uma aplicação da função de custo variável translog, GEMF Discussion Paper No. 1. University of Coimbra

  4. Dismuke C, Sena V (1999) Has DRG payment influenced the technical efficiency and productivity of diagnostic technologies in Portuguese public hospitals? An empirical analysis using parametric and non-parametric methods. Health Care Manage Sci 2:107–116

    Article  Google Scholar 

  5. Lima E (2000) A produção e a estrutura de custos dos hospitais públicos: Uma aplicação de um modelo translogaritmico. Associação Portuguesa da Economia da Saúde Discussion Paper No. 2

  6. Ozcan Y, Luke R, Haksever C (1992) Ownership and organizational performance: a comparison of technical efficiencies across hospitals types. Med Care 30(9):781–784

    Article  Google Scholar 

  7. Valdmanis V (1992) Sensitivity analysis for DEA models. J Public Econ 48:185–205

    Article  Google Scholar 

  8. Burgess J, Wilson DW (1993) Technical efficiency in veterans administration hospitals. In: Fried H, Lovell C, Schmidt SS (eds) The measurement of productivity efficiency: techniques and applications. Oxford University Press, Oxford

    Google Scholar 

  9. Dalmau E, Puig-Junoy J (1998) Market structure and hospital efficiency: evaluating potential effects of deregulation in the National Health Service. Rev Ind Organ 13:447–466

    Article  Google Scholar 

  10. Rodríguez-Álvarez A, Lovell C (2004) Excess capacity and expense preference behaviour in national health systems: an application to the Spanish public hospitals. Health Econ 13(2):157–169

    Article  Google Scholar 

  11. Siciliani L (2006) Estimating technical efficiency in the hospital sector with panel data: a comparison of parametric and non-parametric techniques. Appl Health Economics Health Policy 5(2):99–116

    Article  Google Scholar 

  12. Morey R, Fine D, Loree SW (1990) Comparing the allocative efficiency of hospitals. Int J Manag Sci 18(1):71–83

    Google Scholar 

  13. Byrnes V, Valdmanis V (1994) Analysing technical and allocative efficiency of hospitals. In: Charnes A, Cooper W, Lewin A, Seiford LM (eds) Data envelopment analysis: theory, methodology and applications. Kluwer, Dordrecht

    Google Scholar 

  14. Beguin C, Simar L (2004) Analysis of the expenses linked to hospital stays: how to detect outliers. Health Care Manage Sci 7(2):89–96

    Article  Google Scholar 

  15. Ferrier G, Rosko M, Valdmanis V (2006) Analysis of uncompensated hospital care using a DEA model of output congestion. Health Care Manage Sci 9(2):187–188

    Article  Google Scholar 

  16. Barbeta G, Turati G, Zago A, Behavioural differences between public and private non-profit hospitals in the Italian Health Service. Health Economics (forthcoming)

  17. Pilyavsky A, Aaronson W, Bernet P, Rosko M, Valdmanis V, Golubchikov M (2006) East–west: does it make a difference to hospital efficiencies in Ukraine? Health Econ 15(11):1173–1186

    Article  Google Scholar 

  18. Häkkinen U (2005) The impact of changes in Finland’s health care system. Health Econ 14(S1):S101–S118

    Article  Google Scholar 

  19. Hofmarcher M, Paterson I, Riedel M (2002) Measuring hospital efficiency in Austria: A DEA approach. Health Care Manage Sci 5(1):7–14

    Article  Google Scholar 

  20. Blank J, Eggink E (2004) The decomposition of cost efficiency: an empirical application of the shadow cost function model to Dutch general hospitals. Health Care Manage Sci 7(2):79–88

    Article  Google Scholar 

  21. Greene W (2004) Distinguishing between heterogeneity and efficiency: stochastic frontier analysis of the World Health Organisation’s panel data on national health care systems. Health Econ 13:959–980

    Article  Google Scholar 

  22. Rosko M (2001) Cost efficiency of US hospitals: a stochastic frontier approach. Health Econ 10(6):539–551

    Article  Google Scholar 

  23. Zuckerman S, Hardley J, Jezzoni L (1994) Measuring hospital efficiency with a cost function. J Health Econ 13(3):255–280

    Article  Google Scholar 

  24. Caves R, Porter M (1977) From entry barriers to mobility barriers: conjectural decisions and contrived deterrence to new competition. Q J Econ 91:241–261

    Article  Google Scholar 

  25. Barney J (1991) Firm resources and sustained competitive advantage. J Manage 17:99–120

    Article  Google Scholar 

  26. Rumelt R (1991) How much does industry matter? Strateg Manage J 12(3):167–185

    Article  Google Scholar 

  27. Wernerfelt B (1984) A resource-based view of the firm. Strateg Manage J 5(2):171–180

    Article  Google Scholar 

  28. Teece D, Pisano G, Shuen A (1997) Dynamic capabilities and strategic management. Strateg Manage J 18(7):509–533

    Article  Google Scholar 

  29. Jensen M, Meckling W (1976) Theory of the firm: managerial behaviour, agency costs and capital structure. J Financ Econ 3:305–360

    Article  Google Scholar 

  30. Liebenstein H (1966) Allocative efficiency vs. X-efficiency. Am Econ Rev 56(3):392–415

    Google Scholar 

  31. Luenberger D (1992) Benefit function and duality. J Math Econ 21:461–481

    Article  Google Scholar 

  32. Dupuit C (1848) De la mesure de l’utilité des travaux publics. Ann Ponts Chaussées 8:332–375

    Google Scholar 

  33. Chambers R, Chung Y, Färe R (1996) Benefit and distance functions. J Econ Theory 70:407–419

    Article  Google Scholar 

  34. Chambers R, Chung Y, Färe R (1998) Profit, directional distance functions, and Nerlovian efficiency. J Optim Theory Appl 98:351–364

    Article  Google Scholar 

  35. Shephard R (1970) Theory of cost and production functions. Princeton University Press, Princeton NJ

    Google Scholar 

  36. Briec W (1997) A graph type extension of Farrell technical efficiency measure. Journal of Productivity Analysis 8:95–110

    Article  Google Scholar 

  37. Debreu G (1951) The coefficient of resource utilization. Econometrica 19:273–292

    Article  Google Scholar 

  38. Farrell M (1957) The measurement of productive efficiency. J R Stat Soc 120:253–281

    Article  Google Scholar 

  39. Banker R, Maindiratta A (1988) Nonparametric analysis of technical and allocative efficiency in production. Econometrica 56:1315–1332

    Article  Google Scholar 

  40. Varian H (1984) The nonparametric approach to production analysis. Econometrica 52:579–597

    Article  Google Scholar 

  41. Chambers R (1996) A new look at exact input, output, and productivity measurement, Department of Agricultural and Resource Economics Working Paper 96-05, University of Maryland

  42. Chambers R, Pope RD (1996) Aggregate productivity measures. Am J Agric Econ 78:1360–1365

    Article  Google Scholar 

  43. Färe R, Grosskopf S, Lindgren B, Roos P (1989) Productivity developments in Swedish hospitals: a Malmquist output index approach. In: Charnes A, Cooper V, Lewin A, Seiford L (eds) Data envelopment analysis: theory, methodology and applications. Kluwer, Dordrecht

    Google Scholar 

  44. Caves DW, Christensen LR, Diewert WE (1982) The economic theory of index numbers and the measurement of inputs outputs and productivity. Econometrica 50:1393–1414

    Article  Google Scholar 

  45. Briec W, Chambers R, Färe R, Peypoch N (2006) Parallel neutrality. Journal of Economics 88:285–305

    Article  Google Scholar 

  46. Boussemart JP, Briec W, Peypoch N, Tavéra C (2006) a-Returns to scale in multi-output production technologies, Unpublished paper

  47. Balk BM, Färe R, Grosskopf S, Margaritis D, Exact relations between Luenberger productivity indicators and Malmquist productivity indexes. Economic Theory, forthcoming

  48. Grosskopf S (2003) Some remarks on productivity and its decompositions. Journal of Productivity Analysis 20:459–474

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. ISEG, Technical University of Lisbon, Rua Miguel Lupi, 20, 1249-068, Lisbon, Portugal

    Carlos Pestana Barros

  2. University of the Azores and CEEApla, Rua da Mãe de Deus, 9501-801, Ponta Delgada, Portugal

    António Gomes de Menezes & José Cabral Vieira

  3. LAMPS, GEREM, IAE, University of Perpignan, 52 avenue Paul Alduy, Perpignan, F-66860, France

    Nicolas Peypoch

  4. GEREM, IAE, University of Perpignan, 52 avenue Paul Alduy, Perpignan, F-66860, France

    Bernardin Solonandrasana

Authors
  1. Carlos Pestana Barros
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. António Gomes de Menezes
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Nicolas Peypoch
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Bernardin Solonandrasana
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. José Cabral Vieira
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to António Gomes de Menezes.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Barros, C.P., Gomes de Menezes, A., Peypoch, N. et al. An analysis of hospital efficiency and productivity growth using the Luenberger indicator. Health Care Manage Sci 11, 373–381 (2008). https://doi.org/10.1007/s10729-007-9043-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10729-007-9043-6

Keywords

Search

Navigation