Analysis of uncompensated hospital care using a DEA model of output congestion
Uncompensated care can create financial difficulties for hospitals. The problem is likely to worsen as the number of individuals lacking health insurance continues to grow. The objective of this study is to measure how uncompensated care affects hospitals' ability to provide the services for wh...
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| Published in: | Health care management science Vol. 9; no. 2; pp. 181 - 188 |
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| Main Authors: | , , |
| Format: | Journal Article |
| Language: | English |
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Springer
01-05-2006
Springer Nature B.V |
| Series: | Health Care Management Science |
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| Abstract | Uncompensated care can create financial difficulties for hospitals. The problem is likely to worsen as the number of individuals lacking health insurance continues to grow. The objective of this study is to measure how uncompensated care affects hospitals' ability to provide the services for which they do receive compensation. Applying output-based data envelopment analysis (DEA) under various assumptions on the disposability of outputs to a sample of Pennsylvania hospitals, we find that, on average, hospitals could have produced 7% more output if they had all operated on the best-practice frontier and that uncompensated care reduced the production of other hospital outputs by 2%. Thus, even if hospitals were to operate efficiently, they might still face financial distress as a result of providing uncompensated care. The findings in our study suggest that policy makers should continue looking at ways to increase funding to hospitals providing uncompensated care while not distorting economic incentives to reduce excessive costs. |
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| AbstractList | Uncompensated care can create financial difficulties for hospitals. The problem is likely to worsen as the number of individuals lacking health insurance continues to grow. The objective of this study is to measure how uncompensated care affects hospitals' ability to provide the services for which they do receive compensation. Applying output-based data envelopment analysis (DEA) under various assumptions on the disposability of outputs to a sample of Pennsylvania hospitals, we find that, on average, hospitals could have produced 7% more output if they had all operated on the best-practice frontier and that uncompensated care reduced the production of other hospital outputs by 2%. Thus, even if hospitals were to operate efficiently, they might still face financial distress as a result of providing uncompensated care. The findings in our study suggest that policy makers should continue looking at ways to increase funding to hospitals providing uncompensated care while not distorting economic incentives to reduce excessive costs. [PUBLICATION ABSTRACT] Uncompensated care can create financial difficulties for hospitals. The problem is likely to worsen as the number of individuals lacking health insurance continues to grow. The objective of this study is to measure how uncompensated care affects hospitals' ability to provide the services for which they do receive compensation. Applying output-based data envelopment analysis (DEA) under various assumptions on the disposability of outputs to a sample of Pennsylvania hospitals, we find that, on average, hospitals could have produced 7% more output if they had all operated on the best-practice frontier and that uncompensated care reduced the production of other hospital outputs by 2%. Thus, even if hospitals were to operate efficiently, they might still face financial distress as a result of providing uncompensated care. The findings in our study suggest that policy makers should continue looking at ways to increase funding to hospitals providing uncompensated care while not distorting economic incentives to reduce excessive costs. Copyright Springer Science + Business Media, Inc. 2006 Uncompensated care can create financial difficulties for hospitals. The problem is likely to worsen as the number of individuals lacking health insurance continues to grow. The objective of this study is to measure how uncompensated care affects hospitals' ability to provide the services for which they do receive compensation. Applying output-based data envelopment analysis (DEA) under various assumptions on the disposability of outputs to a sample of Pennsylvania hospitals, we find that, on average, hospitals could have produced 7% more output if they had all operated on the best-practice frontier and that uncompensated care reduced the production of other hospital outputs by 2%. Thus, even if hospitals were to operate efficiently, they might still face financial distress as a result of providing uncompensated care. The findings in our study suggest that policy makers should continue looking at ways to increase funding to hospitals providing uncompensated care while not distorting economic incentives to reduce excessive costs. |
| Author | Rosko, Michael D Ferrier, Gary D Valdmanis, Vivian G |
| Author_xml | – sequence: 1 givenname: Gary D surname: Ferrier fullname: Ferrier, Gary D organization: Department of Economics, University of Arkansas, Fayetteville, AR 72701, USA – sequence: 2 givenname: Michael D surname: Rosko fullname: Rosko, Michael D – sequence: 3 givenname: Vivian G surname: Valdmanis fullname: Valdmanis, Vivian G |
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| Cites_doi | 10.1016/S0038-0121(99)00010-5 10.2307/1906814 10.2307/2601057 10.1007/b109347 10.1023/A:1026255523228 10.2307/2343100 10.1023/A:1007864806704 10.1097/00004010-200407000-00008 10.1016/S0038-0121(01)00008-8 10.1377/hlthaff.W2.139 10.1377/hlthaff.19.6.168 10.1002/hec.607 10.1007/BF01000584 10.1111/j.1477-9552.2003.tb00072.x 10.1016/S0167-6296(96)00539-5 10.1177/1077558704263796 10.2307/1928055 10.1016/S0038-0121(99)00011-7 10.1097/00004010-199321000-00003 10.1016/S0038-0121(01)00007-6 |
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| SubjectTerms | Congestion Costs Data envelopment analysis DEA Debt financing Delivery of Health Care Economics, Hospital - statistics & numerical data Efficiency Efficiency, Organizational Expenditures Health care Health care policy Health insurance Hospital efficiency Hospitalization Hospitals Humans Indigent care Models, Statistical Output Pennsylvania Profit margins Profitability Studies Uncompensated Care Uninsured people |
| Title | Analysis of uncompensated hospital care using a DEA model of output congestion |
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