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ECONOMICS, EDUCATION, AND HEALTH SYSTEMS RESEARCH

Data Envelopment Analysis to Determine by How Much Hospitals Can Increase Elective Inpatient Surgical Workload for Each Specialty

Franklin Dexter, MD PhD^*, and Liam O’Neill, PhD

*Division of Management Consulting, Department of Anesthesia, University of Iowa, Iowa City, Iowa; Department of Policy Analysis and Management, Cornell University, Ithaca, New York

Address correspondence to Franklin Dexter, Division of Management Consulting, Department of Anesthesia, University of Iowa, Iowa City, IA 52242. Address e-mail to franklin-dexter{at}uiowa.edu

We apply data envelopment analysis to discharge data from the 115 hospitals in the rural state of a study hospital to answer three questions. We use a case study to investigate the usefulness and limitations of data envelopment analysis for assessing three common questions regarding hospital market capture for elective inpatient surgery. (i) The hospital studied in this paper performs 40% of the neurosurgery and 25% of the inpatient urology surgery in its state. Workloads are twice that of the hospitals with the next largest workloads. In contrast, the hospital performs 9% of its state’s cardiac surgery and has a workload half that of the largest volume hospital. The cardiac surgeons want more operating room time, faster turnovers, and capital investment for minimally invasive equipment. Controlling for the distance patients would need to travel for care, would increasing capacity likely increase cardiac surgery workload? (ii) The study hospital has fewer hospitalizations for thoracic surgery than for any other specialty. Is thoracic surgery inpatient workload of 121 lung resections large or small compared with those of orthopedics’ 213 hip replacements, urology’s 132 nephrectomies, and cardiac surgery’s 304 coronary artery bypass grafts? (iii) The hospital’s busiest specialty by discharges is orthopedics. How sensitive is the hospital’s orthopedic workload to changes in decision making at nearby competing hospitals?

IMPLICATIONS: We apply data envelopment analysis to measure market capture of elective inpatient surgery for all hospitals in a state. We evaluate the usefulness of the data envelopment analysis by focusing on one hospital and its competitors.

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