Measuring hospital efficiency in Austria – a data envelopment analysis approach

We investigate the evolution of efficiency and productivity in the hospital sector of an Austrian province for the time period 1994–1996. We use panel data to design non-parametric frontier models (Data Envelopment Analysis) and compare efficiency scores and time patterns of efficiency across medical fields. As health outcomes hardly can be measured in a direct way we make use of two different approaches for output measurement: In a first approach, we employ the number of case mix-adjusted discharges and of inpatient days, in a second we use credit points, which are calculated in course of the newly introduced diagnosis related group-type financing system. We calculate and compare individual efficiency scores for hospital wards as decision making units in specified medical fields. To our knowledge the calculation of ward-specific efficiency scores has not up till now been the unit of non-parametric efficiency analysis. Our two models find different results: Model 1 with conservative output measurement calculates an average efficiency level of 96%, while model 2 with credit points for output measurement puts average efficiency at 70%. Whereas average efficiency in model 1 hardly changes and in model 2 increases modestly in the period 1994–1996, a closer look at single hospitals displays a variety of different efficiency developments over time.