Cost and technical efficiency of physician practices: a stochastic frontier approach using panel data

Abstract

This is the first study to use stochastic frontier analysis to estimate both the technical and cost efficiency of physician practices. The analysis is based on panel data from 3,126 physician practices for the years 2006 through 2008. We specified the technical and cost frontiers as translog function, using the one-step approach of Battese and Coelli to detect factors that influence the efficiency of general practitioners and specialists. Variables that were not analyzed previously in this context (e.g., the degree of practice specialization) and a range of control variables such as a patients' case-mix were included in the estimation. Our results suggest that it is important to investigate both technical and cost efficiency, as results may depend on the type of efficiency analyzed. For example, the technical efficiency of group practices was significantly higher than that of solo practices, whereas the results for cost efficiency differed. This may be due to indivisibilities in expensive technical equipment, which can lead to different types of health care services being provided by different practice types (i.e., with group practices using more expensive inputs, leading to higher costs per case despite these practices being technically more efficient). Other practice characteristics such as participation in disease management programs show the same impact throughout both cost and technical efficiency: participation in disease management programs led to an increase in both, technical and cost efficiency, and may also have had positive effects on the quality of care. Future studies should take quality-related issues into account.

Group practice impacts on patients, physicians and healthcare systems: a scoping review

“…20 90 91 This may be due to more investment in technological costs that solo practices would not be able to afford. 20 91 Some large group practices may also be more inefficient than solo or small group practices. 92 Group practices may improve the uptake of health information technology Physicians practising in groups are more likely to have greater access to health information technology (HIT) and were also more likely to correspond with their patients and other providers via email.…”

The case for the use of multiple imputation missing data methods in stochastic frontier analysis with illustration using English local highway data

“…A small number of applications of SFA briefly mention having made use of MI to handle missing values, but contain little or no further details or discussion. Two studies of the technical and cost efficiency of German physician practices, by Heimeshoff et al (2014) and Kwietniewski and Schreyögg (2018) state that they use MI as a sensitivity check, but do not contain any further discussion of MI and the imputation method(s) used, and do not report the results obtained using MI. Likewise, Bhandari et al (2015) and Qushim et al (2016) analyse the technical efficiency of US beef and lamb farms, respectively, and make brief references to having used MI.…”

Quality‐efficiency trade‐off when the state is the sole provider of hospital services: Evidence from New Zealand

“…Furthermore, increasing efficiency would not transform into expected health outcomes if the level of patient safety and care is compromised. Li and Rosenman (2001) argued that failing to control quality can lead to biassed efficiency estimates.…”