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Incorporating quality in the efficiency assessment of hospitals using a generalized directional distance function approach

Calogero Guccio (), Domenico Lisi (), Marco Ferdinando Martorana () and Giacomo Pignataro ()
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Giacomo Pignataro: Università di Catania, University of York e Politecnico di Milano

Working papers from Società Italiana di Economia Pubblica

Abstract: The increasing pressure to cost containment in the public sector and, specifically, in health care provision raises concern on the potential adverse effects on the hospital quality that would imply the existence of an efficiency-effectiveness trade-off. This hypothesis calls for taking into account explicitly the relationship between efficiency and quality when analyzing hospitals’ performance. This paper adopts a non-parametric approach to study the whole performance in the provision of hospital services in Italy. We employ a generalized directional distance function that allows incorporating both desirable outputs and undesirable outcomes (i.e. risk-adjusted mortality rates) in the estimation of efficiency, thus enabling for studying hospital performance thoroughly, and assess the impact of integrating quality in the efficiency assessment. We find that including quality does matter. In addition, considering that patients in the Italian National Health System do not directly pay for treatments and, thus, hospitals presumably compete on quality in a catchment area, we also study whether taking into account quality matters in studying spatial dependence in hospital performance.

Keywords: hospital efficiency; directional distance function; undesirable outputs; tradeoff effectiveness-efficiency; spatial dependence (search for similar items in EconPapers)
JEL-codes: I12 I18 H75 D22 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-eff, nep-eur and nep-hea
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