Measuring efficiency in clinical departments

Jon Magnussen, Kari Nyland
Health Policy 2008, 87 (1): 1-7

OBJECTIVES: This paper explores the possibilities and limitations of obtaining and interpreting efficiency measurement on the level of the clinical department. We discuss the limitations of case-mix groupings such as the diagnosis related groups on this level.

METHODS: Hospital costs are allocated to clinical departments and efficiency measured using data envelopment analysis (DEA). Outputs are measured as number of discharges adjusted for case-mix using DRGs. The effect of department vs. hospital on the level of measured efficiency is analysed using a simple fixed effects regression model.

RESULTS: We find that measured efficiency depends critically on the chosen model specification. Some department types, notably children's departments have systematically lower levels of measured efficiency.

CONCLUSIONS: : Our findings have implications for the monitoring and financing of clinical departments. DRG type instruments should be applied with caution both for monitoring and financing purposes on the departmental level.

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