Scandinavian Working Papers in Economics

Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

Frontier Estimation Methods as Management Tools in Health Care Production: A Case of Staff Utilization in Danish Orthopaedic Surgery Units

2006, Volume 2006, issue 1, pp. 377-392

Jens Leth Hougaard () and Christian Overgaard ()
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Jens Leth Hougaard: Institute of Economics, University of Copenhagen, Postal: Øster Farimagsgade 5, 1353 København, Danmark ,
Christian Overgaard: Finanstilsynet, Postal: Århusgade 110, 2100 København, Danmark

Abstract: The practical problems related to quantifying the production of health care services and registering quality differences makes the use of frontier estimation methods such as Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) somewhat problematic when applied to analysing hospital reimbursement schemes. Consequently, the general attitude among health economists has been sceptical concerning the value of these methods for regulatory purposes. Recent methodological developments, however, have emphasized that the frontier estimation methods are helpful tools for management of the individual production units rather than useful regulatory devices. The present paper tries to review and discuss one such theoretical development called Multi-directional Efficiency Analysis, and the potential usefulness as a management tool is illustrated using a data set of Danish orthopaedic surgery units.

Keywords: Frontier Estimation Methods; productive efficiency; healthcare; Orthopaedic Surgery

JEL-codes: A10

Language: English

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