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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: firstname.lastname@example.org (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 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). such as avoidance of readmission and complications (for inpatients) and survey ratings (for outpatients). In contrast. 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.M. and evaluate alternative paths to reduce inefﬁciencies. 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). Our analysis also includes measures of quality that have been tracked by this organization. Section 2 of this paper includes a literature review of the application of DEA in health care. Most early studies concerned themselves with the efﬁciency of hospital services. it is possible to conclude that the physician being evaluated is efﬁcient. 2. and severity that have been commonly used in DEA. Literature review Substantial research has been done on DEA applications to the health care sector. Wagner et al. DEA searches for ‘‘good apples. DEA focuses on the best practice or efﬁcient physicians for the purpose of improving overall performance. no prior studies have employed these particular elements of the process.J. DEA can then be used to identify physicians. The data used for this study are real data taken from the health care organization’s claims database. 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’’.. In addition. This paper should be of interest to health care managers and health care researchers alike. non-comparable measures can be incorporated into the analysis. although more recently attention has shifted to physician services. As far as we know. A DMU (i.e. a tailored comparison group of efﬁcient physicians to whom the inefﬁcient physician should look for improvements. for each inefﬁcient physician. this stepwise method has not previously been used in the study of health care problems. . To our knowledge. In this way. or a combination of two or more of them. Unlike traditional physician proﬁling. including a discussion of the available measures of outcome quality. Finally. the efﬁcient physicians who will serve as role models. / Socio-Economic Planning Sciences 37 (2003) 141–163 143 utilized for every DMU . This database contains data on cost.’’ that is. DEA also develops. Our paper makes several contributions to the existing work on physician proﬁling and DEA. The paper is organized as follows. When the above is not the case. exists which can produce the same outputs with fewer inputs or can produce more outputs with the same inputs. utilization. Section 3 presents the data used in this study. Section 5 presents the overall conclusions of this study and discusses the ongoing work with this data set. Lastly. who are relatively inefﬁcient. a physician) is inefﬁcient when another physician. measure the magnitude of the inefﬁciency. The goal is to ﬁnd a redistribution of resources to make an inefﬁcient physician as efﬁcient as the best-practice physician.
public health centers in Spain . Of the 15 physicians. intensive care. Two studies focused on nursing service efﬁciency within hospitals. including the selection of indicators . the quantity of patients. The panel size. They used medical expenditures as inputs and seven quality indicators as outputs. and statistical methods used for analysis [3. internists. Using a sample of 3000 urban hospitals. surgeries. Sherman  examined the efﬁciency of seven teaching hospitals in Massachusetts. Further. including Veterans Administration medical centers . medical background. In an interesting study of hospital efﬁciency. Chilingerian and Sherman  used DEA to study 326 physicians. Salinas-Jimenez and Smith  attempted to measure the quality of services provided by the medical practitioners in family health service authorities in England. The application of DEA has been extended to other types of health care institutions. three were found to be efﬁcient.23]. i. and subspecialists. and ambulatory and emergency care. including those in family and general practice. Inputs consisted of length of stay and ancillary costs.24.  examined the efﬁciency of medical–surgical nursing units in 105 hospitals by using three DEA models that considered different combinations of inputs and outputs. procedures. and payer mix) and hospital efﬁciencies. for seven .144 J. This study found that two of the seven hospitals were inefﬁcient and suggested speciﬁc input reductions for the inefﬁcient hospitals. examination of physician practice characteristics (including age. Tobit analysis identiﬁed the characteristics of the efﬁcient physicians . cost of supplies and purchased services. Chilingerian and Sherman  evaluated 15 hospital-based cardiologists.M. The study used inputs of full-time equivalents (FTEs). rural health programs . Nunamaker  used inpatient costs as inputs and patient days as outputs to study routine nursing service efﬁciency at 17 Wisconsin hospitals. in order to explore the utilization of medical resources between generalist and specialist physicians. appeared to be less than efﬁcient . organ procurement organizations . and health maintenance organizations .e. nurses trained. / Socio-Economic Planning Sciences 37 (2003) 141–163 In an early application of DEA to hospitals. More recently. while outputs were the successful treatment of low-severity and high-severity heart failure and shock patients. for example. Other DEA studies by Chilingerian [1. who were members of a large Independent Practice Association (IPA). Wagner et al. ownership. DEA research in health care has been devoted to studying the efﬁciency of physician practices. practice specialty.27] considered 24 internists and 12 surgeons in a major teaching hospital. sources of data [2.25]. and hospital days. and the percentage of female patients who have had a cervical smear in the previous ﬁve and a half years. In one study. HMO afﬁliation. and number of beds and outputs of patient days. Ozcan and Luke  looked at the relationships between four hospital characteristics (size.. identiﬁed through DEA. membership in a multihospital system. regional agencies with programs on area aging . and number and mix of cases) revealed why some physician practices. In a later study. and internsXresidents trained. Grosskopf and Valdmanis  conducted a similar analysis of 82 California hospitals measuring acute care. He also estimated the potential cost savings for each inefﬁcient hospital if it were to become efﬁcient. Ozcan  analyzed the sensitivity of various input and output variables in DEA models. Most of the research in physician proﬁling has dealt with the collection and analysis of physician data.22. including. the study looked at the physicians’ effectiveness as measured by the proportion of patients treated by each physician that resulted in morbidity or mortality. In one of the ﬁrst studies to explicitly include quality considerations. Dittman et al. tests. Inputs consisted of the utilization of visits. the percentage of practices employing a nurse practitioner.
the organization allowed the use of only every third physician for inclusion in a pilot study. and prescriptions. The innovations in this work include our use of output quality measures (including patient survey results). We then incorporated a member-generated quality measure obtained from separate data source of responses from patient surveys. a stepwise approach to give a greater understanding of the model results. resulting in an initial sample of . / Socio-Economic Planning Sciences 37 (2003) 141–163 145 different age–sex categories (in order to account for case mix) served as output measures. 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. lab tests. which were available from the claims database. In the end. the data for this study were collected for calendar year 1995. the health care organization had practical and conﬁdentiality concerns about releasing the data for every member in this practice group. However. The study found only 28. In an earlier paper dealing with physician evaluation. 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. as opposed to the physicians’ environment. The study also found that physician efﬁciency varied by geographic region. Ozcan et al. we sought to examine the differences in the physicians’ practice. and superefﬁciency scores. 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. This paper continues that work with a greater focus on and more development of the methodology. 3. physician visits. Some recent DEA studies have attempted to benchmark physician performance through the use of claims data. specialist visits. Thus. ratio-based physician proﬁles. with their related costs and included as outputs the number of treated patient episodes categorized into three severity levels. A group of 81 PCPs met these criteria. 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. However. He selected as inputs the number of hospitalizations. Although the study found one-half of the physicians to be inefﬁcient. Wagner et al.J. so we chose the study group to be as homogeneous as possible. Ozcan  analyzed the behavior of 160 physician practices in the treatment of otitis media. Sample The literature review cites several studies that compared the types of physicians (both generalists and specialists) and practices across geographic regions.1. ‘‘best practice’’ physicians included both specialists and generalists. 3.  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.M.8% of the physicians to be efﬁcient and revealed a clear pattern that attributed excessive resource consumption and higher costs to inefﬁcient physicians. The claims database contains data for a rolling 3-year period. Studying 176 physicians who treated sinusitis. We started by using the indicators in the existing.
ratios are how the health care organization currently measures quality and are thus familiar to the users in that form. Thus. was that physicians be able to handle a more severely ill population. the lowest value for this encounter ratio for the remaining PCPs was 0. Additionally. Here the goal was that physicians see an increased panel size and/or show increased levels of quality. The remaining measures of utilization (admissions. Second. While it would have been possible to use the absolute numbers of inpatients without readmission or complications. the 21 physicians were identiﬁed only as physician A. the ﬁnal study group size was 21 PCPs. hospital days. for inpatient variables of quality. while for others. While we are not intending this analysis to be generalizable across all provider groups. we developed measures of severity for use in the DEA models. satisfaction with their PCP. 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. / Socio-Economic Planning Sciences 37 (2003) 141–163 27 physicians. to truly investigate the efﬁciency of this particular practice group. prior studies combining cost and quality have also used ratio quality measures [21. or a practice type very different from the usual internist. These were also treated as outputs. One striking feature of the data was that a small group of these physicians had very few outpatient encounters with their panel members. To indicate a gain in quality. Wagner et al.70.35 outpatient encounters for all remaining physicians. we divided the set of possible measures into inputs and outputs (see Table 1). Assuming that these low encounter rates indicated some anomaly. with an average of 1. The desired results of the physician practice represented the outputs. we used a composite score resulting from a member survey regarding access to their PCP. which we feared could make distinguishing among them difﬁcult.5 outpatient encounters per panel member per year. Once we obtained the data.146 J. Again. their panel members had the majority of their encounters with physicians other than their own PCP. Although other studies discuss the importance of using quality variables in DEA models of physician efﬁciency. using fewer of these resources would realize productivity gains. For some physicians in this small group. from an efﬁciency point of view. the desired result. few actually have quality data available. physician B. 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 one that has advantages over the physician proﬁling reports now used by this organization. (In this paper. Third. we performed various validity checks to ensure that the data were reasonable. For the outpatient quality measure. Measures Starting with the measures used in the current ratio-based physician proﬁles. etc. First. In this study. the absolute numbers of patients who were readmitted or who had complications were small. Without doubt. there were simply no encounters.M.2. all 81 physicians would need to be included. and reenrollment with their . we had to transform the two quality measures currently used by the health care organization by subtracting them from 1. namely increased output measures indicated increased productivity.26]. we dropped PCPs from our sample if they had less than 0. we left these quality measures as percentages for a number of reasons. we used three measures of quality as outputs. (For reference. and physician encounters) and costs (hospital and encounter) were classiﬁed as input measures.) 3.) As a result of dropping some physicians.
we discuss the development of the DEA models and present our analysis of the data. . DEA models and analysis In this section.J. / 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. and reenrollment with PCP (where larger values imply greater quality) PCP. satisfaction with PCP. Wagner et al.M. where values > 1 imply that members are sicker than average) Quality measure of PCP based on members’ survey regarding access to PCP. The inclusion of these quality variables allowed for greater discrimination among physicians. 4.
Therefore. with the CRS and VRS frontiers indicated. Thus a CRS frontier seemed appropriate. 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. For these reasons. 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. Comparison of efﬁcient frontiers. CRS models have been used in a number of health care studies. more patients would be expected to need proportionally more resources.148 J. We assumed that physicians’ resources or inputs could be changed (controllable variables). a decision was needed about whether to use constant returns to scale (CRS) or variable returns to scale (VRS). Development of DEA model In designing this study. the VRS frontier was often heavily inﬂuenced by only a few physicians with large practices. variable returns to scale did not seem justiﬁed’’. Wagner et al. which presents a scatterplot of a DEA model with one output (PANEL) and one input ($TOTAL).M. 1.1. the CRS frontier was used for all analyses in this study. speciﬁcally panel size. while the majority of physicians’ outputs. i. which relied heavily on the utilization of hospital or physician resources. and health status. . the model used for this preliminary study did not examine the issue of non-zero slacks. Additional support for the choice of a CRS model can be found in Fig. average case weight. for example. and Chilingerian  who argued that ‘‘since there is no reason to believe that the act of increasing caseloads has a scale effect on the productivity of inputs. Ozcan et al.e. we faced a number of decisions about the speciﬁc DEA model to employ. technical or ‘‘weak’’ efﬁciency was considered efﬁcient . 1. Second. were basically givens (uncontrollable variables).. 2500000 2000000 Total Payments ($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. For the types of resources or inputs in this study. Additionally. In this ﬁgure. / Socio-Economic Planning Sciences 37 (2003) 141–163 4. we did not expect scale effects. 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. .
as additional variables are added to the analysis.21]. measures of severity (AVGCASEWT) and HEALTHSTAT. p. respectively [1. %NOCOMPLICATIONS. Search for a ‘‘parsimonious’’ model In our use of DEA. Wagner et al. As used in this paper. 252]. and several aggregated measures of costs ($INPATIENT. In explaining this stepwise technique to non-technical DEA users. i. and $TOTAL). we call it the ‘‘yes.. and $OPNOTPCP). And ‘‘yes. and QSCORE. more PCPs may become efﬁcient. high correlations among input or output variables could cause difﬁculties in DEA analysis. using as many input and output variables as needed but as few as possible. For this combined model. $OPWPCP. only one PCP is efﬁcient. the set of physicians rated as fully efﬁcient usually grows. HOSPDAYS. A parsimonious model typically shows generally low correlations among the input and output variables. guided by the user’s understanding of the production system.e. For example. We should note that adding input or output variables to a DEA model is done by adding constraints to the underlying linear program.2. $ANCILLARY. Therefore. one aim was to ﬁnd a ‘‘parsimonious’’ model. / 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. we will show how a DEA model can be built in what we call a ‘‘stepwise’’ approach. but’’ if you add in the health status indicators. starting with one input variable and one output variable and then adding additional variables in steps. 1. $ROOM&BOARD. the total number of input and output variables should be less than one-third the number of DMUs [32. In forthcoming sections. Splitting the analysis in this fashion identiﬁed some interesting results that were not obvious from a single DEA analysis. and ENCNOTPCP).35. As a rule of thumb. individual measures of cost ($PHYSICIAN. 4. Since adding more variables will likely increase the efﬁciency scores . %NOREADMISSION.J. we examined the effect of adding variables in a stepwise manner. We started our analysis by combining both inpatient and outpatient measures. ‘‘Yes.M. . including measures of resource utilization (ADMITS. 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. looking at total payments vs. ENCWPCP. In fact. but’’ approach. panel size using the CRS frontier in Fig. We then analyzed inpatient and outpatient performance separately. adding highly correlated input or output variables would indicate that many PCPs were efﬁcient. and the three quality measures. 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. 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. when they were actually differentiated solely by small and essentially random ﬂuctuations. Possible outputs included each physician’s panel size (PANEL). $OUTPATIENT. Thus adding additional variables will either leave the efﬁciency scores unchanged or will increase them . the stepwise approach is suggested as an ad hoc procedure. Possible input measures for this model are listed in Table 1. This rule will inﬂuence the maximum number of input and output variables allowed with this sample.
937 0.868 0. we combined inpatient and outpatient measures. total hospital days.ENCW.988 1. implying that the measures were not contributing the same information to the analysis.000 0. however.993 0.978 1.948 0.750 0.879 0.909 0.368.$PHYSICIAN $ROOM& $ANCILLARY $OPW.989 0. the correlations between the number of encounters and the payments for encounters (for both PCP and non-PCP encounters) were also extremely high.000 0.972 0.966 0.943 0.949 0.794 0.994 0.000 0.693 1.000 0.000 0.150 J. While any one of these variables could be used to represent inputs.$OPNOT.977 1.3.000 0.861 0. The correlation matrix also indicated that total inpatient and total outpatient payments were fairly highly correlated (0.949 0. We debated the need for two severity variables.932 1.976 1.848 0. The inputs for this model were total inpatient payments. While we might have thought that a push to reduce inpatient costs might lead to increases in outpatient costs.896 0.986 Examining the correlation matrix in Table 2 for the set of possible input variables led to several insights.726 0. the high positive correlation value showed that this was not the case.563 0.873 0.820 0. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 2 Input variable correlations ADMITS HOSP. Moreover.847 0. the two measures of severity. room and board. Similarly.909).958 0.M. Wagner et al.991 0. These variables appeared to measure different things (perhaps because even in an overall healthy panel.566 0.000 0. as shown in Table 3. the total inpatient payments was extremely highly correlated (0. showed a correlation of only 0.941 0. and the assorted payments (whether physician.861 0.914 0.852 0.625 0.982 0.591 0. and $OPNOTPCP. the quality measures were all correlated at very low levels with one another. two choices of input variables seemed supportable: (1) the completely aggregated measure of $TOTAL and (2) the less aggregated set of $INPATIENT.918 0.966 or above) with all inpatient inputs measuring utilization and cost.947 0.543 0. payments for PCP encounters and payments for non-PCP . A review of the correlation matrix in Table 3 justiﬁed the inclusion of all output variables in the DEA analysis.561 0.938 1. only the outpatient cost variables and not the outpatient utilization variables were selected as input measures in the DEA analysis.ENCNOT. it was possible for a few members to have a number of acute episodes due to accidents or other unforeseen events).550 0.928 0. AVGCASEWT and HEALTHSTAT.786 0.607 0. For this data set the correlation analysis shows that measures of admissions. total payments (combined inpatient and outpatient) were highly correlated with some cost variables but not others.950 0.512 0.$IN$OUTDAYS PCP PCP BOARD PCP PCP PATIENT PATIENT ADMITS HOSPDAYS ENCWPCP ENCNOTPCP $PHYSICIAN $ROOM&BOARD $ANCILLARY $OPWPCP $OPNOTPCP $INPATIENT $OUTPATIENT $TOTAL 1. First. Thus again.999 0.767 0.978 0.732 1. $OPWPCP. were generally not high.587 0.908 0.000 0. Correlations among outputs. Not surprisingly. 4.966 1. or ancillary) varied in unison.944 0.953 0. After further analysis of the correlation matrix found in Table 2. we chose total inpatient payments.839 0.641 0.000 0.956 0. Combined inpatient and outpatient analysis In our ﬁrst analysis.000 0.000 0.914 1.585 0.986 0.
000 À0. %NOREADMISSION.972 for physician M to 0.361 1.000 À0. and Q appeared in no reference sets. Wagner et al.074 1.000 0.151 1. / Socio-Economic Planning Sciences 37 (2003) 141–163 Table 3 Output variable correlations PANEL PANEL AVGCASEWT HEALTHSTAT %NOREADMISSION %NOCOMPLICATION QSCORE 1. For outputs we selected panel size.018 0. Efﬁcient physician R appeared in most of the reference sets (6). 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. %NOREADMISSION.290 À0. This analysis identiﬁed 11 out of the 21 physicians as efﬁcient. 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. QSCORE. HEALTHSTAT Table 4 presents the efﬁciency scores and reference set for each physician. %NOCOMPLICATIONS. average case weight. referred to as Set 1. This analysis. Thus. follows: Set 1 Inputs: $INPATIENT. AVGCASEWT. we studied the DEA model using the stepwise approach.134 À0.329 0.122 0. In order to uncover the causes of physician efﬁciencies. percentage of inpatient admissions not readmitted within 15 days.000 À0. L. Because it provides an objective way of identifying the ‘‘best practice’’ physicians.508 AVGCASEWT HEALTHSTAT %NOREADMISSION 151 %NOCOMPLICATIONS 1. and the quality score from the patient survey.368 À0.024 0. DEA represents an improvement over the current ratio-based physician proﬁling methods. %NOCOMPLICATIONS. and the three quality measures.212 À0. panel health status. %NOREADMISSION.M.645 for physician J. QSCORE AVGCASEWT. %NOCOMPLICATIONS. this method alone does little to explain why certain physicians are efﬁcient and others are not. percentage of inpatients who did not develop complications. $OPNOTPCP Outputs: PANEL. The scores of the inefﬁcient physicians ranged from 0. QSCORE Set 4 Inputs: $TOTAL Outputs: PANEL.J.141 encounters. as calculated by this model. efﬁcient physicians H. $OPWPCP. However.430 À0. HEALTHSTAT .082 0.000 0.
849 1.972 0. U O F. Set 2 identiﬁed only physician R as efﬁcient.000 1.789 0.651 0. However.000 Reference Set O G. For example.000 1.975 for physician A to 0. Wagner et al. All of the physicians identiﬁed as efﬁcient when using only one total cost input (Set 4) were still identiﬁed as .152 J. Efﬁciency scores for the inefﬁcient physicians ranged from 0.000 1.556 to 0. R. In this analysis. / 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. adding quality measures changed the efﬁciency score for physician H from 0. In this analysis. R A. This effect was seen in the analysis.000 1.000 0. R F.000 0.000 1. physicians G and U also became efﬁcient. I A. U Table 5 presents the efﬁciency scores for Sets 1–4. adding variables in this manner will likely cause the set of efﬁcient physicians to grow. The reasons for physician G’s shift to efﬁciency were not so apparent. U G.M. and $OPNOTPCP) shows the effect of disaggregating the cost variables. R F. A few other physicians also showed a marked change from Set 2. This physician treated the most patients for the least dollars. O. physicians F. if at all. Disaggregating the cost variables does change the results of the analysis.000 1. Physician A still had the highest efﬁciency score (0. O.975) and physician B the lowest score (0. R. Physician U stood out as a quality leader since he or she had perfect scores on %NOREADMISSION and %NOCOMPLICATIONS and among the highest QSCORE values. and O also became efﬁcient.968 0. P.744.454 for physician B. H. Set 4 shows the effect of adding measures of severity. O.732 1.791 1. the addition of quality changed the efﬁciency scores of the inefﬁcient physicians only slightly.827 0.740 1.000 0. U A.000 0. A comparison of Set 4 containing one input ($TOTAL) with Set 1 containing three inputs ($INPATIENT. R. I. $OPWPCP.460) among the inefﬁcient physicians. As previously discussed. 1).645 0. Using a CRS frontier (see Fig. Set 3 shows what happens when considerations of quality are added.
000 1.000 1. and O due to high severity.651 0. but physician J had the lowest score (0.M.000 1.000 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 1.692 0.000 efﬁcient when using disaggregated costs (Set 1).785 0.827 0.571 0.923 0.975 0.923 0.696 0.975 0.000 1. and O were also found to be efﬁcient by the disaggregated model.000 Set 2 $TOTAL Set 3 $TOTAL Set 4 $TOTAL 153 Outputs: PANEL PANEL %NOREADMISSION %NOCOMPLICATIONS QSCORE PANEL %NOREADMISSION %NOCOMPLICATIONS QSCORE AVGCASEWT HEALTHSTAT 0.804 0.000 1.485 0.523 1.000 1. L.000 0. and physicians F.780 1.000 0. H. Wagner et al.000 A B C D E F G H I J K L M N O P Q R S T U 0. we believed that separate analysis of inpatient and outpatient practices might produce additional insights.711 0. I.756 0.000 1.808 0. Comparing the aggregated and disaggregated cost models also revealed a substantial change in physician efﬁciency scores.744 0.918 0.560 1.849 1.000 0.957 0.000 0.771 0.457 0.517 0. In addition.885 0.000 0.798 0.972 1.645) using the disaggregated model.968 0. physicians G and U due to high quality.791 1. P.733 1.571 0.804 0.777 1.524 0.000 0.000 1.000 1.732 1. These additional analyses made it possible to identify the causes of physician efﬁciency.972 0.723 0.789 0. Physician R became efﬁcient due to low resource utilization.571 0. physician B still had a low efﬁciency score.832 0.000 0.716 0.740 1.784 0. Although we were aware of cross-effects between inpatient and outpatient variables.837 0. .519 0.J.804 0.556 0.975 0.518 0.645 0.921 0.000 0.862 1. These analyses follow.460 0.820 0.454 0.742 0.879 0.904 0.694 0. Physicians A.670 0.000 0.696 1.
panel health status. physician H had an efﬁciency score of 0. HEALTHSTAT Fig. percentage of inpatients admissions not readmitted within 15 days and percentage of inpatient admissions who did not develop complications. %NOCOMPLICATIONS.3 we found that physician U had perfect inpatient quality measures.M. $INPATIENT (Set 5). and two quality measures. %NOREADMISSION. . His or her efﬁciency score rose to 0. AVGCASEWT $INPATIENT PANEL. For example. Inpatient analysis The input measure used for inpatients was the total inpatient payments. %NOREADMISSION. 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. average inpatient case weight. Table 6 presents the efﬁciency scores for Sets 5–8. %NOCOMPLICATIONS. as well as the lowest total inpatient payments. 2.288 when quality measures were included in Set 6. However. %NOREADMISSION. with the CRS frontier indicated. 2 shows the scatterplot of PANEL vs.154 J. From the combined analysis in Section 4. Wagner et al. %NOCOMPLICATIONS $INPATIENT PANEL. We were somewhat surprised that in the analysis of all the four sets.4. A closer look at these results showed the effect of introducing additional variables. only physician U was found to be efﬁcient. Possible outputs included panel size. 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. AVGCASEWT. Inpatient (Set 5) CRS frontier.233 when we considered only panel size as the output measure in Set 5. / Socio-Economic Planning Sciences 37 (2003) 141–163 4. Following a stepwise procedure.
Physicians C and G did show some improvement in efﬁciencies when health status was included. and for those that did the change was very slight.277 0.409 1. physician P’s efﬁciency score increased from 0.000 $INPATIENT PANEL %NOREADMISSION %NOCOMPLICATIONS AVGCASEWT HEALTHSTAT 1.522 0.176 0.409 1.497 0.654 0.214 0.469 0. Adding in panel health status also affected relatively few scores.618 0.000 Set 7 when we ﬁgured in average case weight.658 0.469 0.423 0.499 0.736 0.618 0.311 0. Wagner et al.362 0.328 0.396 0.670 0.347 0.811 0.683 0.404 0.347 0.177 0.607. adding in quality did not change many scores.214 0.641 – A B C D E F G H I J K L M N O P Q R S T U 0.277 0.541 0.519 0.357 0.409 1.357 0.423 0.177 0.214 0.469 0.409 1.522 0. panel .370 0.347 0.157 0.000 0.736 0.464 0.176 0.746 0.464 0.751 0.339 0.608 with the addition of health status in Set 8. payments for non-PCP encounters.421 0.J.623 0.480 0.654 0.885 0.608 0.5.428 0.404 0.275 1. Possible outputs included panel size.428 0.177 0.658 0.499 0.277 0.685 0.564 0.404 0.480 0. 4.779 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 $INPATIENT PANEL %NOREADMISSION %NOCOMPLICATIONS AVGCASEWT HEALTHSTAT 0.564 0.214 0.915 1.M. physician H scored a much improved 0.311 0.935.469 0.607 0.277 0.233 0.362 0.000 0.618 0. Considerations of case weight had a greater effect.480 0.787 0.000 0. and total outpatient payments.658 0.935 0.658 0.370 0.935 0. This score changed to only 0. For example.288 0.347 0.633 0.157 0.623 0.404 0.522 to 0. Outpatient analysis Possible input measures for outpatients included payments for PCP encounters.519 0.480 0.000 0. Interestingly.000 0.177 0.644 0.
Outpatient (Set 9) CRS frontier. For the outpatient data. with one input ($OUTPATIENT) and one output (PANEL). physician H had one of the lowest efﬁciency scores (0. Similar to the analysis performed on the inpatient data. the inclusion of the severity measure in Set 12 resulted in no additional efﬁcient physicians. $OPNOTPCP PANEL $OPWPCP. QSCORE.935) with the addition of health 1400000 Total Outpatient Payments ($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. / Socio-Economic Planning Sciences 37 (2003) 141–163 health status. The efﬁciency score increased further (0. the efﬁciency score of physician H increased considerably (0. adding more variables increased the set of efﬁcient physicians. For the PCPs who were not in the set rated efﬁcient. Converting total outpatient payments into two variables in Set 10 yielded a small improvement in the efﬁciency score (0. .812). However. Finally. Table 7 presents the efﬁciency scores for Sets 9–12. $OPNOTPCP PANEL. when the quality score was introduced in Set 11. $OUTPATIENT (Set 9). When we separated PCP and non-PCP payments in Set 10. QSCORE $OPWPCP. 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. and quality score from the patient survey. $OPNOTPCP PANEL.M. 3. with the CRS frontier indicated. 3 shows the scatterplot of PANEL vs.590). For example. Wagner et al.542) for the ﬁrst outpatient model described in Set 9. the addition of new variables improved those physicians’ scores dramatically. HEALTHSTAT Fig. Figuring in the quality indicator in Set 11 showed physician F to be efﬁcient. In Set 9.156 J. only physician R was efﬁcient. physicians G and O also came out efﬁcient.
.715 0.603 0.812 0. Alternatively.651 0.771 1.000 0. scored only in the mid range of efﬁciency in the outpatient analyses.746 0.764 0.000 0.504 0. each efﬁcient DMU.000 0.488 0.469 0.000 1.872 0.744 0.6.000 0.640 0. the only efﬁcient PCP in all of the inpatient analyses.762 0.789 0.746 0.000 0.774 0. DMUs that are markedly dissimilar from the rest.720 0. 4.794 0. Either way. i.729 1. in turn.604 0.651 0. Sometimes these outliers deserve special attention because they are ‘‘breakthrough’’ DMUs.000 0.M.746 0. / 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 0.508 0.000 0.789 0.645 0.671 0.764 0.000 0.542 0.651 0.729 1.e.643 0.768 0. We noted with interest that physician U.676 0.749 0. Andersen and Petersen  ﬁrst proposed the superefﬁciency approach and determined how to calculate the resulting scores.645 0.758 0.J.645 0.590 0.971 0.000 1.771 1. these outliers have a strong inﬂuence on the efﬁciency results of the DEA analysis. removing.571 1.789 0.650 0.720 0. Thrall  made the connection that the .720 0.619 1.877 0.848 0. One method that examines outlier DMUs is called ‘‘superefﬁciency.557 0.877 0.813 status in Set 12.768 0.877 0.758 0.580 1.621 0. they can represent an error in the model data.505 0.651 0.681 0. Wagner et al.000 0.751 0.721 0.832 0.729 1. and calculating a measure of the resulting change.’’ This method involves rerunning the DEA model. Superefﬁciency model One common issue with DEA analyses is that the results can be very sensitive to outliers.812 0.601 0.635 0.527 0.771 1.923 1.000 0. Insights into the analysis can be gained by studying these DMUs and examining the degree to which they inﬂuence the ﬁnal efﬁciency solutions.813 Outputs: PANEL A B C D E F G H I J K L M N O P Q R S T U 0.759 0.
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. the efﬁciency score may now be equal to or greater than 1.33 DMU 2 3 Efficiency=1 2 1 DMU 3 0 0 1 2 3 Output 1 4 5 6 Fig. The original position of DMU 2 was 33 percent farther from the origin than the projected point. All three DMUs are efﬁcient. The example involves three DMUs that have two outputs (as graphed).M. Fig. For an inefﬁcient DMU. Thus. since efﬁcient DMUs must now have a reference set of other DMUs (a ‘‘superefﬁciency reference set’’). and thus its superefﬁciency score is calculated as 1.’’ O’Neill  applied superefﬁciency to the health care sector by calculating superefﬁciency scores for a DEA model using data from 27 large. a DMU is not allowed to be in its own reference set. 4. A history of superefﬁciency methods can be found in Dula and Hickman . . the efﬁciency score will not change. 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. DMUs with an efﬁciency score that is greater than 1 are described as superefﬁcient. Therefore. The superefﬁciency model is an extension of the traditional DEA model. In the traditional model. and the efﬁciency scores will never be higher than 1. a DMU can always be in its own reference set. The DEA frontier is shown as a solid line. Superefﬁciency example. In the superefﬁciency model. The distance from the origin to the point where DMU 2 is projected onto the shifted efﬁcient frontier is deﬁned as 1. However.33. / Socio-Economic Planning Sciences 37 (2003) 141–163 resulting scores were measures of ‘‘extremeness. as represented by the dotted line. and all have the same input. 4 shows an example to illustrate the concept of superefﬁciency. urban hospitals.158 J. superefﬁciency can be interpreted as a measure of a DMU’s inﬂuence. the traditional DEA model always has a feasible solution. If DMU 2 is removed from its own reference set. Wagner et al.
I A.972 0.097).849 1. I. O.740 1.000 1. U 1. U Scores without physician G 1. Therefore.732 1. the superefﬁciency scores were relatively low. R. Table 8 includes superefﬁciency values for the combined inpatient and outpatient model (Set 1). Even with these physicians removed. Q Superefﬁciency scores 1.651 0.789 0. G.648 0. When either physician G or physician U was removed.849 1.000 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. U O F.000 0.000 1.000 159 Scores without physician U 1.000 0. Q G. Q G. Set 8.000 1. L H.582) and physician U (2.000 0. two more models were run: one with physician G removed and one with physician U removed (also in Table 8). Table 9 presents the superefﬁciency values and reference sets for the other models (Sets 2–12).000 0.829 0.000 1.134 1.000 1. Otherwise the greatest change was in the efﬁciency score of physician E.050 Reference set for superefﬁcient PCPs O. These scores provide some interesting insights into the issue of physician efﬁciency. physician C’s efﬁciency increased from 0.972 0. M.789 when physician U was removed. This result was not unexpected since physician U was the only efﬁcient PCP in all of these models.097 C.1. O F G. I.789 1.972 0. none of the efﬁciency scores changed very much. U L. However. for this model. This score increased from 0.968 0.000 Original reference set O G.372 1. With .789 0. all of the linear programs for the superefﬁcient DEA analyses were feasible (infeasibility is technically possible). For all of these analyses.789 0.000 1. To check the actual inﬂuence.740 to 0. R 1.645 0.000 1.000 1. P.791 1. for example.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.000 0.000 1.000 0.000 0. U O.000 1.827 0. R.732 1.791 1. H. We found the highest superefﬁciency values were for physician U in the inpatient models (Sets 5–8)..732 1.000 0.651 1.000 1.203 G. R 1.383 1. I.000 0.000 1. U H.827 0.148 2. U A. Wagner et al.e. R.651 1.968 to 1. Their scores may indicate that these physicians were of high inﬂuence. below 2.740 1.000 1. We can observe the high inﬂuence of physician U by considering.000 1. R.000 0.294 A.000 1.000 0. P F. namely physician G (2.645 0. O. removing these physicians only affected the efﬁciency scores of inefﬁcient physicians with physicians G or U in their reference set.000 0.039 F. i. O. physicians with superefﬁciency scores of 2 do not appear to have a high inﬂuence. O. In this study.000 — 1.000 1.193 1. Two PCPs had superefﬁciency scores over 2.849 1.000 0.582 1.J.M. U 2. R F.
physicians A.R O.091 2. Scores for the other inefﬁcient physicians also increased. thus having both high quality and low resource usage? Or have we made some misidentiﬁcation.294 1.R A C C.H F.I F.103 1. previously with efﬁciency scores of 0.519 1. / 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 1.033 1.030 1.294 Superefﬁcient reference set A U A.R G F G. by almost 0.Q G F G. removing the PCPs of high inﬂuence had only small effects on the efﬁciency scores.G. In summary. some.294 1.040 1.U F. respectively. 0.926 1. superefﬁciency is a post-modeling sensitivity analysis technique.U G.160 J.G.O F.R G.097 1. and P.110 1.212 1.P C. Certainly physician U would be of interest in this analysis. Our study of the superefﬁciency models together with the traditional DEA models provided further insight into the efﬁciency of the physicians. however.3.097 2.002 1.143 1.519 2. removing the PCP with the high superefﬁciency score did seem to have a signiﬁcant impact on the efﬁciency scores of the remaining physicians.H.I. C.R A.033 1.P F O. became efﬁcient.R L.M.935.811. Wagner et al.232 1. . such as physicians E and O.175 1. Is this physician highly skilled at diagnosis and able to quickly determine the resources needed to treat his or her panel. For the combined models and for the outpatient models. it does have the capability to highlight these issues. For the inpatient models. so that physician U is actually a statistical outlier? While superefﬁciency does not have the answer.033 1.027 1.658.030 1. and 0.O G F 4 5 6 7 8 9 10 11 12 physician U removed.027 1.999 1.U H.006 1.078 1.
By determining efﬁciency with a single measure and by identifying a small set of desirable physician practice patterns. 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. that inpatient and outpatient efﬁciencies often differed for the same PCP. The identiﬁcation of the reference groups represents perhaps the greatest beneﬁt of DEA.J. / Socio-Economic Planning Sciences 37 (2003) 141–163 161 5. thus quantifying with a single value the degree to which each physician is inefﬁcient. utilization. such as PANEL. as either an addition to or even a replacement for the more . in this case. they set up meetings of their physician groups in order to provide an opportunity for the efﬁcient physicians to interact with the other PCPs.3: Combined Inpatient and Outpatient Analysis) but gave little information about what was allowing some PCPs to be ranked efﬁcient and others not. 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. DEA ascertained those PCPs who can serve as ‘‘role models’’ to the other physicians. The superefﬁciency analysis was easy to implement and posed no technical problems. 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. With DEA we combined multiple inputs and multiple outputs to provide a single comprehensive efﬁciency measure incorporating cost. An analysis involving a larger group of physicians could further reﬁne these models. In this paper. at least. instead of using only one output measure. one by one. We would also recommend to the organization managers that instead of (or in addition to) distributing quarterly proﬁles. severity. For inpatients. the HMO may realize new approaches for managing and controlling costs and for rewarding physicians. Essentially. 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. taken from existing information in a claims database of a managed health care organization. superefﬁciency did identify a physician of ‘‘high inﬂuence’’ who would be of particular interest to this health care organization. Building the model in a stepwise manner and dividing the model into separate inpatient and outpatient models revealed reasons for physician efﬁciency. we discuss the development of DEA models for physician proﬁling using resource utilization. severity. This study involved only a small group of physicians.M. and quality measures. This paper has also demonstrated how building the model in a stepwise manner. by adding the input and output variables into the DEA models. and quality. For example. The next major step for this health care organization is to implement DEA models in routine evaluation of physicians. Future work will likely undertake such reﬁnements. We also explored the use of superefﬁciency scores to identify physicians with ‘‘high inﬂuence’’ on the efﬁcient frontier. led to greater insight into the reasons why certain physicians were identiﬁed as efﬁcient. We saw. as a pilot study. it would be possible and desirable to break the panel into subgroups by age and gender or even by health status. Wagner et al. Additionally DEA also identiﬁed a reference set of efﬁcient PCPs to which each inefﬁcient PCP can be compared. This breakdown has commonly been done in other studies. Conclusions This study shows the feasibility and advantages of using DEA for physician proﬁling.
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