The Association between Hospital Ownership and Technical Efficiency in a Managed Care Environment

Abstract

This study assessed the association between hospital ownership and technical efficiency in a managed care environment. Hospital technical efficiency scores were calculated via the data envelopment analysis (DEA) method, employing four input variables and three output variables from the American Hospital Association Hospital Survey Data for acute care general hospitals in Florida. By utilizing the hospital technical efficiency scores as a dependent variable, we determined that non-profit hospitals were more efficient than for-profit hospitals for all 4 years examined in this study. In particular, for-profit hospitals with between 100 and 249 beds and those with more than 400 beds had lower technical efficiency scores as compared to their nonprofit peers. Another finding was that teaching hospitals were more efficient than non-teaching hospitals in 2001-2003, but not in 2004. Those variables associated with managed care, namely "number of HMO contracts" and "contracted with HMO", however, were not shown to be statistically significant.