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Advances in physician proﬁling: the use of DEA
Janet M. Wagner*, Daniel G. Shimshak, Michael A. Novak
Department of Management Science and Information Systems, University of Massachusetts Boston, 100 Morrissey Blvd., Boston, MA 02125, USA
Abstract Insurers, health plans, and individual physicians in the United States are facing increasing pressures to reduce costs while maintaining quality. In this study, motivated by our work with a large managed care organization, we use readily available data from its claims database with data envelopment analysis (DEA) to examine physician practices within this organization. Currently the organization evaluates primary care physicians using a proﬁle of 16 disparate ratios involving cost, utilization, and quality. We employed these same factors along with indicators of severity to develop a single, comprehensive measure of physician efﬁciency through DEA. DEA enabled us to identify a reference set of ‘‘best practice’’ physicians tailored to each inefﬁcient physician. This paper presents a discussion of the selection of model inputs and outputs, the development of the DEA model using a ‘‘stepwise’’ approach, and a sensitivity analysis using superefﬁciency scores. The stepwise and superefﬁciency analyses required little extra computation and yielded useful insights into the reasons as to why certain physicians were found to be efﬁcient. This paper demonstrates that DEA has advantages for physician proﬁling and usefully augments the current ratiobased reports. r 2003 Elsevier Science Ltd. All rights reserved.
Keywords: DEA; Physician proﬁling; Health care efﬁciency
1. Introduction One important way for health plans and insurers to cope with the pressure to increase productivity while maintaining quality is analyze the practices of their physicians. This paper describes the use of data envelopment analysis (DEA) to improve methods of measuring physician efﬁciency in a study undertaken for a large New England managed care organization. Since physicians consume sizable portions of health care spending and control access to numerous other resources, better management by and of physicians can have a signiﬁcant impact on controlling the spiraling costs of health care.
*Corresponding author. Tel.: +1-617-287-7890; fax: +1-617-287-7725. E-mail address: email@example.com (J.M. Wagner). 0038-0121/03/$ - see front matter r 2003 Elsevier Science Ltd. All rights reserved. doi:10.1016/S0038-0121(02)00038-1
J.M. Wagner et al. / Socio-Economic Planning Sciences 37 (2003) 141–163
Analysts to date have had difﬁculty in establishing a useful and equitable notion of physician efﬁciency and pinpointing speciﬁc improvement strategies . In manufacturing and ﬁnancial businesses, for example, it is often possible to develop a single summary measure of performance, such as proﬁt or market share. In health care settings, however, there must be multiple measures of performance because outcomes such as patient health and satisfaction are considerations as vital as revenues and costs. In addition, in health care, it can be difﬁcult to determine precisely the amounts of resources or input levels required to efﬁciently yield the desired results or output levels. Currently the organization we worked with prepares reports or ‘‘proﬁles’’ on a regular basis for each primary care physician (PCP). The proﬁles include detailed information regarding a PCP’s costs, utilization of resources, and outcome quality (e.g., cost per admission, hospital admissions per thousand patients, and readmission rates). These indicators, many of which are in the form of ratios, are compared against performance averages for other physicians. Proﬁling involving multiple ratios can more effectively identify over- and underutilization of services, uncover problems with the efﬁciency and quality of care, and assess physician performance . Proﬁles are designed to generate a speciﬁc action if the performance indicators for a particular physician differ from the average by a certain amount. This attempt to identify and correct ‘‘outliers’’ is sometimes referred to as ‘‘the search for bad apples’’ [2,3]. The ratio-based indicators used in physician proﬁling attempt to highlight physician performances that are exceptionally high or low. For example, a large number of hospital admissions per number of members served in the physician’s array of patients or ‘‘panel’’ would stand out as an indication of inefﬁciency. However, because indicators are limited to one measure of input and/or one measure of output, they cannot easily accommodate situations where multiple outputs are produced using multiple inputs, as is true for physicians. To compensate for the one-dimensional nature of the indicators, a large set of ratios and normative values needs to be calculated in the proﬁle reports. Unfortunately, with multiple indicators, there is no objective way of identifying inefﬁcient physicians. For example, a physician whose admissions per thousand patients are greater than the average value might be considered potentially inefﬁcient. However, it is not possible to determine how much larger than the average a physician must be to be considered inefﬁcient or even if the average itself is efﬁcient. Additionally, with multiple indicators, a physician may appear efﬁcient for one group of measures but inefﬁcient for another group. Without an objective means of prioritizing these indicators, identiﬁcation of a truly efﬁcient physician becomes difﬁcult. Also, existing methods based on multiple ratios provide very little guidance on how physicians can change their practices to improve their overall performance. In order to overcome the limitations associated with multiple indicators, we will explore physician proﬁling using a tool known as the DEA. Based on linear programming, DEA converts multiple input and output measures into a single, comprehensive measure of efﬁciency without requiring that the relative weights of the measures be known a priori . DEA measures efﬁciency by constructing an empirically based ‘‘best-practice’’ or efﬁcient frontier and by identifying peer groups. Each physician, referred to by the generic name ‘‘decision-making unit’’ (DMU), is compared to a composite unit that is constructed as a weighted combination of other units in its peer group . Each input and output variable can be measured independently in any useful unit, without being transformed into a single metric, provided the same variables are
this stepwise method has not previously been used in the study of health care problems. DEA also develops. utilization. Literature review Substantial research has been done on DEA applications to the health care sector. Lastly. The paper is organized as follows.. In addition. DEA can then be used to identify physicians.M. Section 3 presents the data used in this study. non-comparable measures can be incorporated into the analysis. This database contains data on cost. we focus on the reasons for choosing the speciﬁc DEA model to employ and use an approach of adding variables to the model in a ‘‘stepwise’’ manner so as to better understand the DEA results (see Norman and Stoker  for a presentation of one version of stepwise DEA). This paper should be of interest to health care managers and health care researchers alike. DEA searches for ‘‘good apples. DEA focuses on the best practice or efﬁcient physicians for the purpose of improving overall performance. for each inefﬁcient physician. although more recently attention has shifted to physician services. In contrast.J. and evaluate alternative paths to reduce inefﬁciencies. measure the magnitude of the inefﬁciency. such as avoidance of readmission and complications (for inpatients) and survey ratings (for outpatients). The data used for this study are real data taken from the health care organization’s claims database. the efﬁcient physicians who will serve as role models. The goal is to ﬁnd a redistribution of resources to make an inefﬁcient physician as efﬁcient as the best-practice physician. In this way. many of the existing papers on DEA treat the input and output values used in their studies as simply ‘‘given’’ and treat the DEA model as a ‘‘black box’’. A DMU (i. Our paper makes several contributions to the existing work on physician proﬁling and DEA.e. this paper includes an additional set of analyses using an extension to DEA called superefﬁciency [8–10] to provide a type of sensitivity analysis that can provide information about physicians with a ‘‘high inﬂuence’’ on the efﬁcient frontier (similar to the identiﬁcation of points with very large residuals in multiple regression). . no prior studies have employed these particular elements of the process. Our analysis also includes measures of quality that have been tracked by this organization. it is possible to conclude that the physician being evaluated is efﬁcient. Section 4 discusses the DEA modeling process including the stepwise technique of adding variables to build a DEA model and sensitivity analysis is performed using the superefﬁciency model. Section 5 presents the overall conclusions of this study and discusses the ongoing work with this data set. exists which can produce the same outputs with fewer inputs or can produce more outputs with the same inputs. 2. / Socio-Economic Planning Sciences 37 (2003) 141–163 143 utilized for every DMU . a tailored comparison group of efﬁcient physicians to whom the inefﬁcient physician should look for improvements. Wagner et al. or a combination of two or more of them. When the above is not the case.’’ that is. Finally. Unlike traditional physician proﬁling. Most early studies concerned themselves with the efﬁciency of hospital services. Section 2 of this paper includes a literature review of the application of DEA in health care. As far as we know. To our knowledge. and severity that have been commonly used in DEA. who are relatively inefﬁcient. a physician) is inefﬁcient when another physician. including a discussion of the available measures of outcome quality.
27] considered 24 internists and 12 surgeons in a major teaching hospital. who were members of a large Independent Practice Association (IPA). Using a sample of 3000 urban hospitals. Most of the research in physician proﬁling has dealt with the collection and analysis of physician data.M. Wagner et al. In one study. and hospital days. in order to explore the utilization of medical resources between generalist and specialist physicians. In an interesting study of hospital efﬁciency. including those in family and general practice. The study used inputs of full-time equivalents (FTEs). appeared to be less than efﬁcient . Dittman et al. the quantity of patients. More recently. examination of physician practice characteristics (including age. three were found to be efﬁcient.23]. nurses trained. DEA research in health care has been devoted to studying the efﬁciency of physician practices. They used medical expenditures as inputs and seven quality indicators as outputs.. ownership. Other DEA studies by Chilingerian [1. surgeries. and subspecialists. Further. i. Inputs consisted of the utilization of visits. In a later study. and health maintenance organizations . intensive care. Ozcan and Luke  looked at the relationships between four hospital characteristics (size. Chilingerian and Sherman  evaluated 15 hospital-based cardiologists. and ambulatory and emergency care. and statistical methods used for analysis [3. and the percentage of female patients who have had a cervical smear in the previous ﬁve and a half years. The application of DEA has been extended to other types of health care institutions. Grosskopf and Valdmanis  conducted a similar analysis of 82 California hospitals measuring acute care. while outputs were the successful treatment of low-severity and high-severity heart failure and shock patients.e. Two studies focused on nursing service efﬁciency within hospitals. the percentage of practices employing a nurse practitioner.25]. regional agencies with programs on area aging . and payer mix) and hospital efﬁciencies. identiﬁed through DEA. and number of beds and outputs of patient days. Sherman  examined the efﬁciency of seven teaching hospitals in Massachusetts. Tobit analysis identiﬁed the characteristics of the efﬁcient physicians . The panel size. Salinas-Jimenez and Smith  attempted to measure the quality of services provided by the medical practitioners in family health service authorities in England.22. This study found that two of the seven hospitals were inefﬁcient and suggested speciﬁc input reductions for the inefﬁcient hospitals. and internsXresidents trained. for example. Of the 15 physicians. Ozcan  analyzed the sensitivity of various input and output variables in DEA models. for seven . organ procurement organizations . procedures. rural health programs . Chilingerian and Sherman  used DEA to study 326 physicians. / Socio-Economic Planning Sciences 37 (2003) 141–163 In an early application of DEA to hospitals. HMO afﬁliation. membership in a multihospital system. medical background. including Veterans Administration medical centers . Nunamaker  used inpatient costs as inputs and patient days as outputs to study routine nursing service efﬁciency at 17 Wisconsin hospitals. Inputs consisted of length of stay and ancillary costs. tests.  examined the efﬁciency of medical–surgical nursing units in 105 hospitals by using three DEA models that considered different combinations of inputs and outputs. including the selection of indicators . sources of data [2. public health centers in Spain .24. In one of the ﬁrst studies to explicitly include quality considerations. and number and mix of cases) revealed why some physician practices.144 J. internists. practice specialty. the study looked at the physicians’ effectiveness as measured by the proportion of patients treated by each physician that resulted in morbidity or mortality. cost of supplies and purchased services. including. He also estimated the potential cost savings for each inefﬁcient hospital if it were to become efﬁcient.
Studying 176 physicians who treated sinusitis. so we chose the study group to be as homogeneous as possible. the health care organization had practical and conﬁdentiality concerns about releasing the data for every member in this practice group. In an earlier paper dealing with physician evaluation. He selected as inputs the number of hospitalizations. The claims database contains data for a rolling 3-year period. / Socio-Economic Planning Sciences 37 (2003) 141–163 145 different age–sex categories (in order to account for case mix) served as output measures.1. 3. Ozcan  analyzed the behavior of 160 physician practices in the treatment of otitis media. This paper continues that work with a greater focus on and more development of the methodology. These internists all referred patients to the same set of metropolitan hospitals and all had a panel size of about 100 or more members from this managed care plan. we sought to examine the differences in the physicians’ practice. physician visits. The study found only 28. and superefﬁciency scores. We then incorporated a member-generated quality measure obtained from separate data source of responses from patient surveys. However. resulting in an initial sample of . We started by using the indicators in the existing. and prescriptions. we selected a group of PCPs who were all internists and who were practicing in a small geographic region within the city where this managed care organization was headquartered. a stepwise approach to give a greater understanding of the model results. Ozcan et al.J. as opposed to the physicians’ environment. lab tests.M. the data for this study were collected for calendar year 1995.8% of the physicians to be efﬁcient and revealed a clear pattern that attributed excessive resource consumption and higher costs to inefﬁcient physicians. specialist visits. Wagner et al. ratio-based physician proﬁles.  discerned no clear differences in efﬁciency between generalists and specialists but found that specialists used more resources and incurred higher service costs than the generalists. In the end. Sample The literature review cites several studies that compared the types of physicians (both generalists and specialists) and practices across geographic regions. with their related costs and included as outputs the number of treated patient episodes categorized into three severity levels. The innovations in this work include our use of output quality measures (including patient survey results). Data This study uses data from the computerized claims database of a large managed care organization in order to evaluate the performance of its member physicians. Although the study found one-half of the physicians to be inefﬁcient. However. which were available from the claims database. A group of 81 PCPs met these criteria. ‘‘best practice’’ physicians included both specialists and generalists. We added two severity measures: average inpatient case weight and panel health status. Wagner and Shimshak  performed a case study and demonstrated the ‘‘messy details’’ of using data available from an actual claims database to do a DEA analysis. the organization allowed the use of only every third physician for inclusion in a pilot study. 3. Some recent DEA studies have attempted to benchmark physician performance through the use of claims data. Thus. The study also found that physician efﬁciency varied by geographic region.
) As a result of dropping some physicians. etc. Without doubt. The desired results of the physician practice represented the outputs. the 21 physicians were identiﬁed only as physician A. For the outpatient quality measure. First. These were also treated as outputs. and one that has advantages over the physician proﬁling reports now used by this organization. or a practice type very different from the usual internist. Although other studies discuss the importance of using quality variables in DEA models of physician efﬁciency. we divided the set of possible measures into inputs and outputs (see Table 1). there were simply no encounters. all 81 physicians would need to be included. we used three measures of quality as outputs. using fewer of these resources would realize productivity gains. we left these quality measures as percentages for a number of reasons. While we are not intending this analysis to be generalizable across all provider groups. Thus.) 3. few actually have quality data available. (For reference. Wagner et al. we used the percentage of inpatients not readmitted to the hospital within 15 days and the percentage of inpatients who did not develop complications as a result of treatment during the course of hospitalization. we developed measures of severity for use in the DEA models. prior studies combining cost and quality have also used ratio quality measures [21. we performed various validity checks to ensure that the data were reasonable. for inpatient variables of quality. The remaining measures of utilization (admissions. While it would have been possible to use the absolute numbers of inpatients without readmission or complications. while for others. namely increased output measures indicated increased productivity. Here the goal was that physicians see an increased panel size and/or show increased levels of quality. Again. with an average of 1.70. / Socio-Economic Planning Sciences 37 (2003) 141–163 27 physicians.M. One striking feature of the data was that a small group of these physicians had very few outpatient encounters with their panel members. (In this paper.146 J. Third.5 outpatient encounters per panel member per year. we had to transform the two quality measures currently used by the health care organization by subtracting them from 1. the absolute numbers of patients who were readmitted or who had complications were small. was that physicians be able to handle a more severely ill population.2. we dropped PCPs from our sample if they had less than 0. we used a composite score resulting from a member survey regarding access to their PCP. For some physicians in this small group. their panel members had the majority of their encounters with physicians other than their own PCP.35 outpatient encounters for all remaining physicians.26]. Additionally. the desired result. Assuming that these low encounter rates indicated some anomaly. and reenrollment with their . Measures Starting with the measures used in the current ratio-based physician proﬁles. Once we obtained the data. to truly investigate the efﬁciency of this particular practice group. ratios are how the health care organization currently measures quality and are thus familiar to the users in that form. the lowest value for this encounter ratio for the remaining PCPs was 0. hospital days. Second. To indicate a gain in quality. we believe this sample is large enough to illustrate the point of this paper—namely that DEA is a useful technique for physician proﬁling. and physician encounters) and costs (hospital and encounter) were classiﬁed as input measures. the ﬁnal study group size was 21 PCPs. which we feared could make distinguishing among them difﬁcult. satisfaction with their PCP. In this study. from an efﬁciency point of view. physician B.
J. satisfaction with PCP. and reenrollment with PCP (where larger values imply greater quality) PCP. we discuss the development of the DEA models and present our analysis of the data. The inclusion of these quality variables allowed for greater discrimination among physicians. Wagner et al. where values > 1 imply that members are sicker than average) Quality measure of PCP based on members’ survey regarding access to PCP. . / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 1 Input and output variables used for DEA analysis INPUTS ADMITS HOSPDAYS $PHYSICIAN $ROOM&BOARD $ANCILLARY ENCWPCP ENCNOTPCP $OPWPCP $OPNOTPCP $INPATIENT $OUTPATIENT $TOTAL 147 Sum of number of members’ inpatient admissions Sum of length of stay in days for inpatient admissions Sum of gross payments for inpatient admissions’ physician costs Sum of gross payments for inpatient admissions’ room and board costs Sum of gross payments for inpatient admissions’ ancillary costs Sum of the number of encounters by members with their PCP where an encounter is deﬁned as all the services received by a member with a PCP in a single day Sum of the number of encounters by members with health care providers other than their PCP Sum of gross payments for encounters by members with their PCP Sum of gross payments for encounters by members with health care providers other than their PCP Sum of total gross payments for inpatient admissions ($PHYSICIAN+$ROOM&BOARD+$ANCILLARY) Sum of total gross payments for all encounters by members ($OPWPCP+$OPNOTPCP) Sum of total gross inpatient and outpatient payments ($INPATIENT+$OUTPATIENT) OUTPUTS PANEL AVGCASEWT %NOREADMISSION %NOCOMPLICATIONS HEALTHSTAT QSCORE Number of members who have chosen this provider as a PCP to be responsible for the coordination of the members’ health care Average relative weights for inpatient admissions based on Diagnosis-Related Groups (DRGs) and used to represent the resource intensity of the admissions (where larger values imply greater resource intensity of admissions) % of inpatient admissions not readmitted to the hospital within 15 days % of inpatient admissions with no complications as a result of treatment during course of hospitalization Indicator of health status of panel using the diagnosis case mix to determine the level of health care resource utilization anticipated to be incurred by members of the panel in a particular year from an analysis of prior years’ health care utilization (based on an average of 1. 4.M. DEA models and analysis In this section.
which relied heavily on the utilization of hospital or physician resources. more patients would be expected to need proportionally more resources. Development of DEA model In designing this study. Comparison of efﬁcient frontiers. we faced a number of decisions about the speciﬁc DEA model to employ. Wagner et al. variable returns to scale did not seem justiﬁed’’. i. / Socio-Economic Planning Sciences 37 (2003) 141–163 4. The ﬁrst of these involved the rationale behind physician proﬁling and led to the choice of an input orientation rather than an output orientation model. the VRS frontier was often heavily inﬂuenced by only a few physicians with large practices.148 J. the efﬁciencies calculated in this paper represented the proportion by which it was expected that a physician could reduce his or her input use and still attain the same outputs. Thus a CRS frontier seemed appropriate. In this ﬁgure. with the CRS and VRS frontiers indicated. the model used for this preliminary study did not examine the issue of non-zero slacks. technical or ‘‘weak’’ efﬁciency was considered efﬁcient . Additional support for the choice of a CRS model can be found in Fig. For the types of resources or inputs in this study. and Chilingerian  who argued that ‘‘since there is no reason to believe that the act of increasing caseloads has a scale effect on the productivity of inputs.1. average case weight. . Second. while the majority of physicians’ outputs. For these reasons. which presents a scatterplot of a DEA model with one output (PANEL) and one input ($TOTAL).. 2500000 2000000 Total Payments ($TOTAL) D 1500000 PCPs CRS Frontier VHS Frontier A R 500000 G U 0 0 100 200 300 400 500 600 700 800 Panel Size (PANEL) 1000000 Fig. Therefore. for example. 1. a decision was needed about whether to use constant returns to scale (CRS) or variable returns to scale (VRS).M. Ozcan et al. CRS models have been used in a number of health care studies. . the CRS frontier was used for all analyses in this study. Additionally. We felt that this VRS frontier in the vicinity of these large practices indicated only that the physicians had few ‘‘neighbors’’ rather than identifying that these large-practice PCPs were particularly efﬁcient. We assumed that physicians’ resources or inputs could be changed (controllable variables).e. were basically givens (uncontrollable variables). speciﬁcally panel size. and health status. we did not expect scale effects. 1.
but’’ if you add in the health status indicators. In explaining this stepwise technique to non-technical DEA users. A parsimonious model typically shows generally low correlations among the input and output variables. Thus adding additional variables will either leave the efﬁciency scores unchanged or will increase them . $OUTPATIENT. As used in this paper. As a rule of thumb. i. the stepwise approach is suggested as an ad hoc procedure. p. Therefore. guided by the user’s understanding of the production system. We should note that adding input or output variables to a DEA model is done by adding constraints to the underlying linear program. we call it the ‘‘yes. individual measures of cost ($PHYSICIAN. and the three quality measures. %NOCOMPLICATIONS.2. For example. the total number of input and output variables should be less than one-third the number of DMUs [32. .21]. and $TOTAL). In fact. $ANCILLARY.J. This rule will inﬂuence the maximum number of input and output variables allowed with this sample. one aim was to ﬁnd a ‘‘parsimonious’’ model.e. 1. Since adding more variables will likely increase the efﬁciency scores . respectively [1. and several aggregated measures of costs ($INPATIENT. ENCWPCP. but’’ what is the impact of quality measures? In contrast to the usual papers that present a list of variables fed into the ‘‘black box’’ of a DEA model. the set of physicians rated as fully efﬁcient usually grows. adding highly correlated input or output variables would indicate that many PCPs were efﬁcient. For this combined model. high correlations among input or output variables could cause difﬁculties in DEA analysis. $OPWPCP. One result of using this stepwise approach was that the speciﬁc factors leading a particular PCP to be identiﬁed as efﬁcient were more readily apparent. and ENCNOTPCP). 4. and $OPNOTPCP). $ROOM&BOARD. HOSPDAYS. when they were actually differentiated solely by small and essentially random ﬂuctuations. Wagner et al. We started our analysis by combining both inpatient and outpatient measures. using as many input and output variables as needed but as few as possible. only one PCP is efﬁcient. And ‘‘yes. Possible input measures for this model are listed in Table 1. we found the stepwise approach produced a greater understanding of the data and useful insights into the managerial question of how efﬁciency can be improved. starting with one input variable and one output variable and then adding additional variables in steps. We then analyzed inpatient and outpatient performance separately. as additional variables are added to the analysis. %NOREADMISSION. we examined the effect of adding variables in a stepwise manner. and QSCORE.M. 252]. ‘‘Yes. looking at total payments vs. / Socio-Economic Planning Sciences 37 (2003) 141–163 149 One of the goals of this paper was not only to present the ﬁnal set of DEA model variables but also to demonstrate the process used in selecting these particular variables from the large set of potential variables. Possible outputs included each physician’s panel size (PANEL). panel size using the CRS frontier in Fig. we will show how a DEA model can be built in what we call a ‘‘stepwise’’ approach. Splitting the analysis in this fashion identiﬁed some interesting results that were not obvious from a single DEA analysis. but’’ approach. including measures of resource utilization (ADMITS.35. more PCPs may become efﬁcient. Search for a ‘‘parsimonious’’ model In our use of DEA.. In forthcoming sections. measures of severity (AVGCASEWT) and HEALTHSTAT.
First.000 0.000 0.914 0.909).794 0.693 1.$OPNOT.566 0.949 0.909 0.000 0.786 0.847 0.M.591 0. were generally not high.944 0. two choices of input variables seemed supportable: (1) the completely aggregated measure of $TOTAL and (2) the less aggregated set of $INPATIENT.585 0.999 0. A review of the correlation matrix in Table 3 justiﬁed the inclusion of all output variables in the DEA analysis. as shown in Table 3.732 1.986 0. payments for PCP encounters and payments for non-PCP .000 0.563 0.937 0. however.587 0.994 0. the quality measures were all correlated at very low levels with one another.$PHYSICIAN $ROOM& $ANCILLARY $OPW. we combined inpatient and outpatient measures.950 0.550 0.561 0.896 0. showed a correlation of only 0.150 J. we chose total inpatient payments.641 0. Not surprisingly.879 0.$IN$OUTDAYS PCP PCP BOARD PCP PCP PATIENT PATIENT ADMITS HOSPDAYS ENCWPCP ENCNOTPCP $PHYSICIAN $ROOM&BOARD $ANCILLARY $OPWPCP $OPNOTPCP $INPATIENT $OUTPATIENT $TOTAL 1.978 1.986 Examining the correlation matrix in Table 2 for the set of possible input variables led to several insights.948 0. the correlations between the number of encounters and the payments for encounters (for both PCP and non-PCP encounters) were also extremely high. We debated the need for two severity variables. The correlation matrix also indicated that total inpatient and total outpatient payments were fairly highly correlated (0. the high positive correlation value showed that this was not the case. While we might have thought that a push to reduce inpatient costs might lead to increases in outpatient costs.978 0. total hospital days.543 0.820 0.982 0.750 0.956 0.873 0.972 0. only the outpatient cost variables and not the outpatient utilization variables were selected as input measures in the DEA analysis. and $OPNOTPCP.607 0.368. For this data set the correlation analysis shows that measures of admissions. it was possible for a few members to have a number of acute episodes due to accidents or other unforeseen events).991 0. Wagner et al.625 0.512 0. Combined inpatient and outpatient analysis In our ﬁrst analysis.ENCNOT.000 0.989 0. Moreover. Correlations among outputs.000 0.861 0. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 2 Input variable correlations ADMITS HOSP.966 1. or ancillary) varied in unison. the two measures of severity. 4.000 0. Thus again.868 0.852 0.976 1.726 0. total payments (combined inpatient and outpatient) were highly correlated with some cost variables but not others.947 0.ENCW. AVGCASEWT and HEALTHSTAT.861 0.966 0.000 0.839 0.3.000 0.943 0.000 0.914 1.966 or above) with all inpatient inputs measuring utilization and cost. room and board. Similarly.953 0. The inputs for this model were total inpatient payments.908 0.941 0. and the assorted payments (whether physician. After further analysis of the correlation matrix found in Table 2.767 0. $OPWPCP.988 1.918 0. These variables appeared to measure different things (perhaps because even in an overall healthy panel.848 0.949 0.932 1. the total inpatient payments was extremely highly correlated (0.000 0.928 0.977 1.958 0. While any one of these variables could be used to represent inputs. implying that the measures were not contributing the same information to the analysis.993 0.938 1.
panel health status. we studied the DEA model using the stepwise approach. This analysis also identiﬁed the set of efﬁcient physicians and a reference set for each inefﬁcient physician of ‘‘best practice’’ physicians with similar practice characteristics. as calculated by this model. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 3 Output variable correlations PANEL PANEL AVGCASEWT HEALTHSTAT %NOREADMISSION %NOCOMPLICATION QSCORE 1. %NOREADMISSION.082 0. Wagner et al. percentage of inpatient admissions not readmitted within 15 days.151 1. average case weight. In order to uncover the causes of physician efﬁciencies. $OPNOTPCP Outputs: PANEL. referred to as Set 1.000 0.000 À0. HEALTHSTAT . %NOCOMPLICATIONS.000 À0. QSCORE AVGCASEWT. this method alone does little to explain why certain physicians are efﬁcient and others are not.508 AVGCASEWT HEALTHSTAT %NOREADMISSION 151 %NOCOMPLICATIONS 1. %NOREADMISSION. L.368 À0.361 1.329 0. percentage of inpatients who did not develop complications.430 À0.134 À0. $OPWPCP. and Q appeared in no reference sets.000 À0.212 À0. This analysis.290 À0. and the three quality measures.645 for physician J. follows: Set 1 Inputs: $INPATIENT.018 0. Because it provides an objective way of identifying the ‘‘best practice’’ physicians.000 0. The scores of the inefﬁcient physicians ranged from 0. QSCORE Set 4 Inputs: $TOTAL Outputs: PANEL.122 0. %NOREADMISSION.024 0. This analysis identiﬁed 11 out of the 21 physicians as efﬁcient. AVGCASEWT. efﬁcient physicians H. QSCORE. HEALTHSTAT Table 4 presents the efﬁciency scores and reference set for each physician. %NOCOMPLICATIONS.074 1. DEA represents an improvement over the current ratio-based physician proﬁling methods. %NOCOMPLICATIONS. For outputs we selected panel size. Thus.J. Efﬁcient physician R appeared in most of the reference sets (6). and the quality score from the patient survey.M. we considered the following three additional sets of input and output measures for the combined inpatient and outpatient analysis: Set 2 Inputs: Outputs: Set 3 Inputs: Outputs: $TOTAL PANEL $TOTAL PANEL.141 encounters. However.972 for physician M to 0.
Disaggregating the cost variables does change the results of the analysis. In this analysis.827 0.000 1.975 for physician A to 0. Physician U stood out as a quality leader since he or she had perfect scores on %NOREADMISSION and %NOCOMPLICATIONS and among the highest QSCORE values. A few other physicians also showed a marked change from Set 2. O.000 1.000 1. For example.000 1.645 0.732 1.975) and physician B the lowest score (0.000 0.152 J.849 1. R F. As previously discussed.791 1. and $OPNOTPCP) shows the effect of disaggregating the cost variables.744.000 Reference Set O G. R F. adding variables in this manner will likely cause the set of efﬁcient physicians to grow.000 1. Wagner et al.000 0. R A. Set 3 shows what happens when considerations of quality are added. Set 2 identiﬁed only physician R as efﬁcient. U G. and O also became efﬁcient.556 to 0.968 0. All of the physicians identiﬁed as efﬁcient when using only one total cost input (Set 4) were still identiﬁed as . Physician A still had the highest efﬁciency score (0.000 1. In this analysis. Efﬁciency scores for the inefﬁcient physicians ranged from 0. I A. I. R. A comparison of Set 4 containing one input ($TOTAL) with Set 1 containing three inputs ($INPATIENT. P. physicians G and U also became efﬁcient.972 0.454 for physician B. 1). O. R. Using a CRS frontier (see Fig. O. Set 4 shows the effect of adding measures of severity. U A. This effect was seen in the analysis. U Table 5 presents the efﬁciency scores for Sets 1–4.M.740 1.000 0. the addition of quality changed the efﬁciency scores of the inefﬁcient physicians only slightly. H. The reasons for physician G’s shift to efﬁciency were not so apparent.789 0. $OPWPCP. physicians F. adding quality measures changed the efﬁciency score for physician H from 0. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 4 Results for Set 1 (combined inpatient and outpatient model) DMU A B C D E F G H I J K L M N O P Q R S T U Scores (all PCPs) 1. U O F. However.000 0.460) among the inefﬁcient physicians. This physician treated the most patients for the least dollars. if at all. R.651 0.
523 1.000 1. Physicians A.827 0. L.556 0.785 0.000 1.000 0. we believed that separate analysis of inpatient and outpatient practices might produce additional insights.975 0.694 0.789 0.560 1.645 0.571 0.000 0.711 0.742 0.460 0.923 0.692 0.804 0.000 0.862 1.849 1.696 0. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 5 Efﬁciency scores for combined inpatient and outpatient models Set 1 Inputs: $INPATIENT $OPWPCP $OPNOTPCP PANEL %NOREADMISSION %NOCOMPLICATIONS QSCORE AVGCASEWT HEALTHSTAT 1.651 0.780 1. H.740 1. Physician R became efﬁcient due to low resource utilization.716 0.000 0.M.524 0.457 0. and O due to high severity. P. and O were also found to be efﬁcient by the disaggregated model.798 0.820 0.904 0.771 0. Wagner et al.000 0.791 1.696 1.733 1. physician B still had a low efﬁciency score.000 efﬁcient when using disaggregated costs (Set 1).921 0.000 0.645) using the disaggregated model. Although we were aware of cross-effects between inpatient and outpatient variables. In addition.000 1.000 1.975 0.923 0. These additional analyses made it possible to identify the causes of physician efﬁciency. physicians G and U due to high quality. but physician J had the lowest score (0.571 0.670 0.000 1.000 1.000 0.000 1.784 0.957 0.517 0.519 0.837 0.972 0.804 0.744 0.879 0.000 0.732 1.918 0. .885 0.972 1.000 0.571 0.000 1. and physicians F. I.518 0.808 0.454 0.832 0.723 0.756 0.485 0. These analyses follow.000 A B C D E F G H I J K L M N O P Q R S T U 0.000 1.J.000 Set 2 $TOTAL Set 3 $TOTAL Set 4 $TOTAL 153 Outputs: PANEL PANEL %NOREADMISSION %NOCOMPLICATIONS QSCORE PANEL %NOREADMISSION %NOCOMPLICATIONS QSCORE AVGCASEWT HEALTHSTAT 0.968 0. Comparing the aggregated and disaggregated cost models also revealed a substantial change in physician efﬁciency scores.000 0.804 0.975 0.777 1.
We were somewhat surprised that in the analysis of all the four sets. as well as the lowest total inpatient payments. / Socio-Economic Planning Sciences 37 (2003) 141–163 4. . Inpatient analysis The input measure used for inpatients was the total inpatient payments. Wagner et al.233 when we considered only panel size as the output measure in Set 5. and two quality measures. $INPATIENT (Set 5). 2 shows the scatterplot of PANEL vs. %NOCOMPLICATIONS. A closer look at these results showed the effect of introducing additional variables.154 J. percentage of inpatients admissions not readmitted within 15 days and percentage of inpatient admissions who did not develop complications. with the CRS frontier indicated. His or her efﬁciency score rose to 0.M. Inpatient (Set 5) CRS frontier. AVGCASEWT $INPATIENT PANEL. physician H had an efﬁciency score of 0. %NOREADMISSION. Table 6 presents the efﬁciency scores for Sets 5–8. For example. 2. Possible outputs included panel size. panel health status.3 we found that physician U had perfect inpatient quality measures. %NOCOMPLICATIONS $INPATIENT PANEL. we looked at four sets of input and output variables: Set 5 Inputs: Outputs: Set 6 Inputs: Outputs: Set 7 Inputs: Outputs: Set 8 Inputs: Outputs: $INPATIENT PANEL $INPATIENT PANEL. However. in 800000 Total Inpatient Payments( $INPATIENT) 700000 600000 500000 400000 N 300000 200000 100000 0 0 L Q I K H F M E G PC O U 100 200 300 400 500 600 700 T R S A J B D PCPs CRS 800 Panel Size (PANEL) Fig. %NOREADMISSION. average inpatient case weight.288 when quality measures were included in Set 6. From the combined analysis in Section 4.4. AVGCASEWT. HEALTHSTAT Fig. %NOREADMISSION. Following a stepwise procedure. %NOCOMPLICATIONS. only physician U was found to be efﬁcient.
Physicians C and G did show some improvement in efﬁciencies when health status was included.421 0.736 0.480 0.157 0.409 1.000 Set 7 when we ﬁgured in average case weight.370 0.607.176 0.311 0. 4. and for those that did the change was very slight.177 0.633 0.396 0. Outpatient analysis Possible input measures for outpatients included payments for PCP encounters.428 0.618 0. panel . Considerations of case weight had a greater effect.499 0.214 0.347 0.787 0.564 0.685 0.233 0. Adding in panel health status also affected relatively few scores.177 0. Wagner et al.658 0.564 0.328 0.157 0.935.464 0.357 0.811 0.370 0.423 0.779 0.311 0.277 0. This score changed to only 0.464 0. physician H scored a much improved 0.347 0.362 0.541 0.885 0.5.409 1.288 0. and total outpatient payments.654 0.277 0.000 0. adding in quality did not change many scores.618 0.277 0.357 0.409 1.683 0.000 0. physician P’s efﬁciency score increased from 0.522 0. Possible outputs included panel size.480 0.641 – A B C D E F G H I J K L M N O P Q R S T U 0.347 0.522 to 0.000 0.000 0.670 0.214 0.618 0.935 0.623 0.000 0.497 0.658 0.409 1.746 0.428 0.362 0.480 0.736 0.404 0.623 0.177 0.M. payments for non-PCP encounters.519 0.214 0.347 0.915 1.177 0.214 0.000 $INPATIENT PANEL %NOREADMISSION %NOCOMPLICATIONS AVGCASEWT HEALTHSTAT 1.423 0.654 0.275 1.277 0.404 0.522 0.607 0. For example.404 0.469 0.608 0.469 0. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 6 Efﬁciency scores for inpatient models Set 5 Set 6 Set 7 Set 8 Set 8 (without physician U) 155 Inputs: Outputs: $INPATIENT PANEL $INPATIENT PANEL %NOREADMISSION %NOCOMPLICATIONS $INPATIENT PANEL %NOREADMISSION %NOCOMPLICATIONS AVGCASEWT $INPATIENT PANEL %NOREADMISSION %NOCOMPLICATIONS AVGCASEWT HEALTHSTAT 0.404 0.658 0.644 0.469 0.499 0.608 with the addition of health status in Set 8.519 0.935 0.176 0.339 0. Interestingly.469 0.751 0.658 0.480 0.J.
For the outpatient data. / Socio-Economic Planning Sciences 37 (2003) 141–163 health status. the inclusion of the severity measure in Set 12 resulted in no additional efﬁcient physicians. the addition of new variables improved those physicians’ scores dramatically.935) with the addition of health 1400000 Total Outpatient Payments ($OUTPATIENT) 1200000 1000000 800000 B 600000 T 400000 E 200000 0 0 100 200 300 400 500 600 700 K O PC I HU Q M F G R N J S A D PCPs CRS 800 Panel Size (PANEL) Fig. adding more variables increased the set of efﬁcient physicians. However. when the quality score was introduced in Set 11. Converting total outpatient payments into two variables in Set 10 yielded a small improvement in the efﬁciency score (0. only physician R was efﬁcient.M. 3. physicians G and O also came out efﬁcient. . Table 7 presents the efﬁciency scores for Sets 9–12. QSCORE $OPWPCP. with one input ($OUTPATIENT) and one output (PANEL). The efﬁciency score increased further (0. $OPNOTPCP PANEL. For example.812). Similar to the analysis performed on the inpatient data. and quality score from the patient survey. we looked at four sets of input and output measures: Set 9 Inputs: Outputs: Set 10 Inputs: Outputs: Set 11 Inputs: Outputs: Set 12 Inputs: Outputs: $OUTPATIENT PANEL $OPWPCP. In Set 9. $OUTPATIENT (Set 9). For the PCPs who were not in the set rated efﬁcient. 3 shows the scatterplot of PANEL vs. the efﬁciency score of physician H increased considerably (0. Finally. with the CRS frontier indicated. physician H had one of the lowest efﬁciency scores (0.590). $OPNOTPCP PANEL. QSCORE. $OPNOTPCP PANEL $OPWPCP.156 J. Figuring in the quality indicator in Set 11 showed physician F to be efﬁcient. Outpatient (Set 9) CRS frontier.542) for the ﬁrst outpatient model described in Set 9. HEALTHSTAT Fig. Wagner et al. When we separated PCP and non-PCP payments in Set 10.
971 0.651 0.M.000 1.601 0. DMUs that are markedly dissimilar from the rest.645 0.720 0.000 0.764 0.758 0.604 0.580 1. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 7 Efﬁciency scores for outpatient model Set 9 Inputs: $OUTPATIENT Set 10 $OPWPCP $OPNOTPCP PANEL Set 11 $OPWPCP $OPNOTPCP PANEL QSCORE Set 12 157 $OPWPCP $OPNOTPCP PANEL QSCORE HEALTHSTAT 0.000 0. Either way. in turn.744 0.720 0.508 0.749 0. Sometimes these outliers deserve special attention because they are ‘‘breakthrough’’ DMUs.877 0.789 0.923 1.504 0.877 0. 4.571 1.6.729 1.812 0.000 0.812 0.590 0. One method that examines outlier DMUs is called ‘‘superefﬁciency.832 0.751 0.715 0.000 0. Alternatively.758 0.643 0.746 0. Thrall  made the connection that the . i.000 0.000 0.’’ This method involves rerunning the DEA model.000 0.000 0.621 0. each efﬁcient DMU.789 0.720 0.557 0. and calculating a measure of the resulting change. We noted with interest that physician U. these outliers have a strong inﬂuence on the efﬁciency results of the DEA analysis.872 0.768 0.676 0.774 0.729 1.768 0.542 0. the only efﬁcient PCP in all of the inpatient analyses.746 0.650 0.813 status in Set 12.764 0.771 1.651 0.729 1.488 0. Wagner et al.635 0.671 0.681 0.848 0. removing.771 1.645 0.651 0. they can represent an error in the model data..J.759 0.000 0.794 0.603 0. Superefﬁciency model One common issue with DEA analyses is that the results can be very sensitive to outliers. scored only in the mid range of efﬁciency in the outpatient analyses.e.000 1.640 0.721 0.877 0.527 0. Andersen and Petersen  ﬁrst proposed the superefﬁciency approach and determined how to calculate the resulting scores.746 0.505 0.619 1. Insights into the analysis can be gained by studying these DMUs and examining the degree to which they inﬂuence the ﬁnal efﬁciency solutions.469 0.762 0.813 Outputs: PANEL A B C D E F G H I J K L M N O P Q R S T U 0.651 0.789 0.000 0.645 0.771 1.
DMUs with an efﬁciency score that is greater than 1 are described as superefﬁcient. the efﬁcient frontier ‘‘seen’’ by DMU 2 moves toward the origin. 6 Original Frontier 5 DMU 1 Superefficient Frontier for DMU 2 4 Output 2 Efficiency= 1.158 J. In the traditional model.33 DMU 2 3 Efficiency=1 2 1 DMU 3 0 0 1 2 3 Output 1 4 5 6 Fig. Superefﬁciency example. . All three DMUs are efﬁcient. The superefﬁciency model is an extension of the traditional DEA model. urban hospitals.’’ O’Neill  applied superefﬁciency to the health care sector by calculating superefﬁciency scores for a DEA model using data from 27 large. 4 shows an example to illustrate the concept of superefﬁciency.M. a DMU is not allowed to be in its own reference set. and all have the same input. / Socio-Economic Planning Sciences 37 (2003) 141–163 resulting scores were measures of ‘‘extremeness. The original position of DMU 2 was 33 percent farther from the origin than the projected point. superefﬁciency can be interpreted as a measure of a DMU’s inﬂuence.33. 4. as represented by the dotted line. since efﬁcient DMUs must now have a reference set of other DMUs (a ‘‘superefﬁciency reference set’’). Fig. and thus its superefﬁciency score is calculated as 1. The superefﬁciency score for a particular DMU then is a measure of how much the efﬁcient frontier is shifted toward the origin by the removal of that DMU. and the efﬁciency scores will never be higher than 1. In the superefﬁciency model. the efﬁciency score will not change. If DMU 2 is removed from its own reference set. For an inefﬁcient DMU. Thus. The distance from the origin to the point where DMU 2 is projected onto the shifted efﬁcient frontier is deﬁned as 1. A history of superefﬁciency methods can be found in Dula and Hickman . Therefore. the traditional DEA model always has a feasible solution. the efﬁciency score may now be equal to or greater than 1. The example involves three DMUs that have two outputs (as graphed). Wagner et al. a DMU can always be in its own reference set. However. The DEA frontier is shown as a solid line.
789 1. When either physician G or physician U was removed.972 0. Table 9 presents the superefﬁciency values and reference sets for the other models (Sets 2–12). U L.000 1.789 0. G.000 1. For all of these analyses.1. R. removing these physicians only affected the efﬁciency scores of inefﬁcient physicians with physicians G or U in their reference set.000 0. L H.582 1. Q G.039 F. all of the linear programs for the superefﬁcient DEA analyses were feasible (infeasibility is technically possible).732 1. However.000 0.097). U A. Even with these physicians removed.000 0.134 1. O F G.827 0. We found the highest superefﬁciency values were for physician U in the inpatient models (Sets 5–8).383 1.000 159 Scores without physician U 1.000 0. Table 8 includes superefﬁciency values for the combined inpatient and outpatient model (Set 1). O. R. M. This score increased from 0. I. two more models were run: one with physician G removed and one with physician U removed (also in Table 8).294 A. R.000 0. Otherwise the greatest change was in the efﬁciency score of physician E. U O F.000 1.651 1. O. O.648 0.849 1.000 1.000 1.097 C.804 — A B C D E F G H I J K L M N O P Q R S T U We calculated superefﬁciency scores for all of the models examined in this study. Two PCPs had superefﬁciency scores over 2.968 to 1. none of the efﬁciency scores changed very much. Q Superefﬁciency scores 1. These scores provide some interesting insights into the issue of physician efﬁciency. R F.J.789 when physician U was removed. Therefore.193 1. U H.000 0. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 8 Superefﬁciency scores and related results for combined inpatient and outpatient model (Set 1) DMU Original efﬁciency scores 1.740 1.000 0.827 0. P F. U 2.849 1.645 0.972 0.789 0. U O.740 1.000 Original reference set O G. U Scores without physician G 1. U 1.000 1. physicians with superefﬁciency scores of 2 do not appear to have a high inﬂuence. This result was not unexpected since physician U was the only efﬁcient PCP in all of these models.000 1.000 0.000 0. We can observe the high inﬂuence of physician U by considering.645 0.050 Reference set for superefﬁcient PCPs O.000 0.148 2.582) and physician U (2.000 1. for example.791 1. R 1.372 1.. Set 8. i.000 0. P.849 1. O.789 0.000 0. I.000 1.M. the superefﬁciency scores were relatively low.000 1.000 — 1.740 to 0.e.000 0.732 1. I A. I. To check the actual inﬂuence.651 1. namely physician G (2. below 2. Q G.791 1.829 0.968 0.000 1.000 0.972 0.203 G. R. Wagner et al.000 1. With .000 1. In this study. Their scores may indicate that these physicians were of high inﬂuence.651 0.000 1.000 1. physician C’s efﬁciency increased from 0. R 1.732 1. H.000 1. for this model.
/ Socio-Economic Planning Sciences 37 (2003) 141–163 Table 9 Superefﬁciency scores for sets 2–12 DEA set 2 3 Efﬁcient PCP R G R U F G H I O R U U U U U R G O R F G O R F G O R Superefﬁciency scores 1. previously with efﬁciency scores of 0.110 1. thus having both high quality and low resource usage? Or have we made some misidentiﬁcation.232 1. physicians A.926 1.175 1.O F.078 1.3.143 1.R L. respectively.G.935. For the inpatient models. so that physician U is actually a statistical outlier? While superefﬁciency does not have the answer.R A C C.G. C.H. by almost 0. however.U G. Scores for the other inefﬁcient physicians also increased. Certainly physician U would be of interest in this analysis.999 1.658. some. it does have the capability to highlight these issues.P C. became efﬁcient.212 1.Q G F G.033 1. superefﬁciency is a post-modeling sensitivity analysis technique.R A.R G.097 1.O G F 4 5 6 7 8 9 10 11 12 physician U removed.027 1.M.R G F G.103 1.P F O.R O. . Wagner et al.160 J.030 1.H F. and 0. such as physicians E and O.294 1. removing the PCPs of high inﬂuence had only small effects on the efﬁciency scores.I. removing the PCP with the high superefﬁciency score did seem to have a signiﬁcant impact on the efﬁciency scores of the remaining physicians.I F.033 1.097 2. In summary.519 1.030 1.033 1.027 1.519 2.U H.002 1. 0.006 1.U F.040 1.811. Our study of the superefﬁciency models together with the traditional DEA models provided further insight into the efﬁciency of the physicians.294 1.294 Superefﬁcient reference set A U A. Is this physician highly skilled at diagnosis and able to quickly determine the resources needed to treat his or her panel. and P.091 2. For the combined models and for the outpatient models.
in this case. Building the model in a stepwise manner and dividing the model into separate inpatient and outpatient models revealed reasons for physician efﬁciency. one by one. and quality measures. at least. We saw. severity. that inpatient and outpatient efﬁciencies often differed for the same PCP. the HMO may realize new approaches for managing and controlling costs and for rewarding physicians. This breakdown has commonly been done in other studies. We would also recommend to the organization managers that instead of (or in addition to) distributing quarterly proﬁles. Future work will likely undertake such reﬁnements. The superefﬁciency analysis was easy to implement and posed no technical problems. For inpatients. we discuss the development of DEA models for physician proﬁling using resource utilization. An analysis involving a larger group of physicians could further reﬁne these models. by adding the input and output variables into the DEA models. and quality. as either an addition to or even a replacement for the more . led to greater insight into the reasons why certain physicians were identiﬁed as efﬁcient. Wagner et al. they set up meetings of their physician groups in order to provide an opportunity for the efﬁcient physicians to interact with the other PCPs. In this paper. DEA ascertained those PCPs who can serve as ‘‘role models’’ to the other physicians. This paper has also demonstrated how building the model in a stepwise manner. This study involved only a small group of physicians. Additionally DEA also identiﬁed a reference set of efﬁcient PCPs to which each inefﬁcient PCP can be compared.3: Combined Inpatient and Outpatient Analysis) but gave little information about what was allowing some PCPs to be ranked efﬁcient and others not. We believe this study has shown that DEA can be used as a powerful tool to give managers a multitude of options to improve efﬁciency.M. Essentially. / Socio-Economic Planning Sciences 37 (2003) 141–163 161 5. The identiﬁcation of the reference groups represents perhaps the greatest beneﬁt of DEA. This health care organization might want to study the efﬁcient physicians to see what ‘‘best practices’’ could be determined and then generalized to other PCPs. such as PANEL. The next major step for this health care organization is to implement DEA models in routine evaluation of physicians. By determining efﬁciency with a single measure and by identifying a small set of desirable physician practice patterns. thus quantifying with a single value the degree to which each physician is inefﬁcient.J. as a pilot study. Better methods of evaluating physician performance will not only help individual PCPs to improve their practices but also will allow the managed health care organization to better oversee its operations and improve planning and policy-making ability. severity. taken from existing information in a claims database of a managed health care organization. For example. The traditional method of including all the variables in one analysis led to the conclusion that 11 out of the 21 physicians were efﬁcient (see Section 4. superefﬁciency did identify a physician of ‘‘high inﬂuence’’ who would be of particular interest to this health care organization. Conclusions This study shows the feasibility and advantages of using DEA for physician proﬁling. We also explored the use of superefﬁciency scores to identify physicians with ‘‘high inﬂuence’’ on the efﬁcient frontier. utilization. With DEA we combined multiple inputs and multiple outputs to provide a single comprehensive efﬁciency measure incorporating cost. it would be possible and desirable to break the panel into subgroups by age and gender or even by health status. instead of using only one output measure.
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