VARIATION IN INEFFICIENCY AMONG US HOSPITALS

This study analyzes the impact of policy variables and other factors o n hospital technical inefficiency in the US. Distance functions are us ed to estimate technical efficiency for each hospital relative to cont emporaneous technologies. The resulting panel of efficiency estimates are then regressed on exogenous factors to gain insight into various i ssues impacting the debate over health-care reform in the US. Methodol ogically, we extend previous work by recognizing data envelopment anal ysis (DEA) efficiency scores as estimates, and by dealing with a censo ring problem at the estimated technology frontier. We use annual data on US hospitals operated by the US Department of Veterans Affairs (VA) , state and local governments, and for-profit as well as nonprofit org anizations from 1985 to 1988.