Scandinavian Working Papers in Economics

HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme

No 2006:2: Efficiency and patient satisfaction in Norwegian hospitals

Terje P. Hagen (), Marijke Veenstrab and Knut Stavem
Additional contact information
Terje P. Hagen: Institute of Health Management and Health Economics, Postal: P.O. Box 1089 Blindern, NO-0317 Oslo, Norway
Marijke Veenstrab: Rikshospitalet University Hospital, Postal: NO-0027 Oslo, Norway
Knut Stavem: Akershus University Hospital, Postal: Medical Department, Akershus University Hospital, NO-1478 Lørenskog, Norway

Abstract: Objective for this working paper is to analyze the effects of a reimbursement reform on somatic hospitals’ efficiency and quality, measured as patient experiences. By the reform a capitation-based block grant system was replaced by an activity-based system. Methods: Data on efficiency and patient satisfaction from 213 hospital departments before (1996) and after (1998, 2000 and 2003) the reform were analyzed using a mixed model approach. The efficiency ratings were developed at the level of the hospital using data envelopment analysis, while the patient satisfaction scores were at department level data from recent patient surveys. Results: Both technical efficiency and patient satisfaction increase after the reform. Discussion: We interpret increasing technical efficiency as a direct effect of the reimbursement reform. Higher patient satisfaction is understood as an effect of lower waiting time, which in its turn is an effect of the introduction of activity-based financing.

Keywords: Public hospitals; prospective payment system; financing; data envelopment analysis; efficiency; patient satisfaction

JEL-codes: I18

30 pages, June 4, 2009

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