63: Data Envelopment Analysis in decision-making on labor and capital investment in the US hospitals

Music City Center 

This is an example of applying an output-oriented DEA with a variable return to scale setting to decision making on investment in labor and capital in 22 US acute care hospitals over 3 years and maximization of the patient outcome indicators. It uses the physician services revenue, total salaries and wages as labor expense indicators and amortization depreciation as an indicator of the consumed capital. The net patient revenue weighted by a sum of the patient outcome indicators CLABSI, CAUTI, SSI, MRSA, CDI and AHRQ PCI 90 are used as an output variable. The research results are a) the group production frontier consisting of the best performers at each input level, b) the group member's efficiency score as the member's distance to the best performing peer and c) slack estimates in labor and capital inputs. These indicators provide objective, data-driven information to the decision makers on the scale and inputs to invest in order to improve the hospital's performance in amount of the services provided and quality of the patient outcomes.

Data Envelopment Analysis

healthcare quality

patient outcomes

investment decision on labor and capital 

Health Policy Statistics Section