Risk-Based Robust Evaluation of Hospital Efficiency

Hospital performance and efficiency are key aspects of a modern national health system. This paper focuses on the evaluation risk of hospital efficiency by investigating and ranking 329 hospitals in the US public healthcare sector. Performance dimensions cover different factors that include cost and revenue, treatment environment and capacity, labors, and technical quality. Although it is possible to appraise hospitals for the given indicators using a systemic approach, data envelopment analysis (DEA), the associated score rankings appear to be inconsistent with respect to the small amount of change in parameters. We develop a robust DEA approach that takes account of the uncertainty of outputs and the solving complexity. Ranking results show that efficient nonprofit hospitals are more sensitive to the development of technical innovation, while the performances of efficient profit-driven hospitals are more easily affected by the reduction of the patient numbers. In addition, we find that the robust approach decreases the risk to mean ratios by 7% for the profit-driven hospital group, which provides a more holistic and well-rounded performance.