Incorporating health outcomes in Pennsylvania hospital efficiency: an additive super-efficiency DEA approach

The health care sector is one of the fastest growing sectors in the United States. Researchers are interested in conducting studies in the area of health economics in order to propose solutions to curb the rapid increase in health care spending and to improve the efficiency of the health care system in the United States. Specifically, hospital efficiency is one important research area in health economics. In this paper, data envelopment analysis (DEA) is used to assess hospital efficiency. An additive super-efficiency model is presented and applied to a sample of general acute care hospitals in Pennsylvania. In addition to the conventional choice of input and output variables, we include the survival rate as a quality measure of health outcome in the set of output variables. Thus our model takes both the quantity and the quality of the output into account. With the results obtained from our proposed DEA model, inefficiencies can be identified for hospitals to address without sacrificing the quality of care.