The paper explores the link between managerial performance and cost efficiency of 617 Japanese general local public hospitals in 1999-2007. Treating managerial performance as unobservable heterogeneity, the paper employs a panel data stochastic cost frontier model with latent classes. Financial parameters associated with better managerial performance are found to be positively significant in explaining the probability of belonging to the more efficient latent class. The analysis of latent class membership was consistent with the conjecture that unobservable technological heterogeneity reflected in the existence of the latent classes is related to managerial performance. The findings may support the cause for raising efficiency of Japanese local public hospitals by enhancing the quality of management.
The paper represents an attempt to use a large sample statistical analysis along with the Federal Social Insurance Fund data in order to assess drug benefit groups of behavior in Russian regions before and after the drug benefit reform.
With Japanese hospital financing reform, a prospective payment system (PPS) has been established for inpatient care to replace the traditional fee-for-service remuneration of hospitals. This paper evaluates the effect of the reform on technical and cost efficiency of local public hospitals. Efficiency is estimated non-parametrically using two-stage data envelopment analysis with bias correction through bootstrap, and parametrically applying stochastic frontier analysis. The descriptive analysis shows that efficiency declines after the introduction of PPS. Difference-in-difference estimations reveal that PPS results in a limited efficiency gain, which might be related to inadequate incentives created by the two-part PPS tariff in Japan. JEL Classification Codes: I12, I18, C31, C61.
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