The efficiency frontier of for-profit hospitals

Jeffrey P. Harrison, Aaron Spaulding, Paul Mouhalis

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

This study evaluates the efficiency of small and large for-profit hospitals using Data Envelopment Analysis (DEA). For this study, small for-profit hospitals are 35 beds or less which is consistent with the Federal designation of critical access hospitals (CAH). Large for-profit hospitals are 36 beds and greater. Results indicate overall efficiency in small for-profit hospitals was 60% in 2013. In contrast, the overall efficiency in large for-profit hospitals was 71% in 2013. The number of small for-profit hospitals operating on the efficiency frontier was 18 which represent 12%. Similarly, the number of large for-profit hospitals operating on the efficiency frontier was 49 which represent 8%. This clearly documents for-profit hospitals' overall efficiency increases with greater size. Hospital executives, healthcare policymakers, taxpayers and other stakeholders benefit from studies that improve hospital efficiency. From a policy perspective, this study demonstrates a positive association between increased hospital size and increased efficiency within the for-profit hospital industry.

Original languageEnglish (US)
JournalJournal of Health Care Finance
Volume41
Issue number4
StatePublished - Jan 1 2015
Externally publishedYes

Keywords

  • Data envelopment analysis
  • DEA
  • For-profit hospital efficiency
  • Hospital efficiency

ASJC Scopus subject areas

  • Health Policy

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