Back to Annual Meeting Page		American Public Health Association 133rd Annual Meeting & Exposition December 10-14, 2005 Philadelphia, PA

Abstract #104288

Vivian Valdmanis, PhD, Health Policy Program, USIP, 600 S 43rd Street, Philadelphia, PA 19104, 215 596 7613, v.valdma@usip.edu and Michael D. Rosko, PhD, Health Administration Department, Widener University, One University Place, Chester, PA 19013.

The past decade has seen the environment of hospitals become more stringent. Two major sources of financial pressure are the growth of enrollment in managed care and increases in the number of uninsured, resulting in mounting uncompensated care burdens. Our research examines whether these pressures have shocked hospitals into more efficient performance or whether quality has been compromised.

Our performance variables are technical efficiency and quality. The former is estimated by a well-recognized frontier technique called data envelopment analysis (DEA). The latter is a risk-adjusted inpatient mortality rate. Our sample is comprised of 170 general hospitals in Pennsylvania, a state that mandates public reporting of uncompensated care and other financial information. The economic and quality performance measures are for 2002. Since it takes time for hospitals to respond to environmental pressures, our financial pressure variables are lagged by 2 years (i.e., 2000). These variables include the amount of uncompensated care provided by the hospital, managed care penetration in the hospital's market, and the hospitals profitability. We will model our quality and efficiency changes simultaneously in order to determine whether they are tradeoffs and if both are affected by previous financial performance and other environmental factors.

Budget reductions for hospital care for the uninsured have placed financial burdens on hospitals. Whereas there has been a substantial literature regarding the financial viability of hospitals, there has been no study that directly relates hospital financial performance in one period of time with its ability to transform resources into actual patient care. Since inputs and outputs may not be competitively priced, thus reflecting social welfare, we opt to use resources in their natural units via the DEA approach. Further, we argue that the real welfare loss of society is when hospitals become inefficient when they can no longer provide adequate patient care. We believe that our work fits well with the overall theme of the meeting: Evidence Based Policy and Practice

Learning Objectives:

• 1.describe how payment policy affects hospital profitability
• 2.understand how DEA can measure hospital efficiency
• 3.articulate the possible trade-off between cost and quality and why this trade-off might not exist
• 4.articulate the implications of payment policy on hospital performance

Keywords: Economic Analysis, Hospitals

Presenting author's disclosure statement:

I wish to disclose that I have NO financial interests or other relationship with the manufactures of commercial products, suppliers of commercial services or commercial supporters.

Recorded presentation