Hospital productivity and the Norwegian
ownership reform - A Nordic comparative study
By Kittelsen, Sverre A.C., Jon Magnussen, Kjartan Sarheim Anthun, Unto Häkkinen, Miika Linna, Emma Medin, Kim Rose Olsen and Clas Rehnberg
HERO Working Paper 10/2008
|| In a period where decentralisation seemed to be the prominent trend, Norway in 2002 chose to
re-centralise the hospital sector. The reform had three main aims; cost control, efficiency and
reduced waiting times. This study investigates whether the hospital reform has improved
hospital productivity using the other four major Nordic countries as controls. Hospital
productivity measures are obtained using data envelopment analysis (DEA) on a comparable
dataset of 728 Nordic hospitals in the period 1999 to 2004. First a common reference frontier
is established for the four countries, enveloping the technologies of each of the countries and
years. Bootstrapping techniques are applied to the obtained productivity estimates to assess
uncertainty and correct for bias. Second, these are regressed on a set of explanatory variables
in order to separate the effect of the hospital reform from the effects of other structural,
financial and organizational variables. A fixed hospital effect model is used, as random effects
and OLS specifications are rejected. Robustness is examined through alternate model
specifications, including stochastic frontier analysis (SFA). The SFA approach in performed
using the Battese & Coelli (1995) one stage procedure where the inefficiency term is
estimated as a function of the set of explanatory variables used in the second stage in the DEA
approach. Results indicate that the hospital reform in Norway seems to have improved the
level of productivity in the magnitude of approximately 4 % or more. While there are small or
contradictory estimates of the effects of case mix and activity based financing, the length of
stay is clearly negatively associated with estimated productivity. Results are robust to choice
of efficiency estimation technique and various definition of when the reform effect takes
|| D24, I12, C14
|| Efficiency, productivity, DEA, SFA, hospitals
4101 Economics of health |
|| The Research Council of Norway
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