Multifactor productivity in physicians' offices: an exploratory analysis.
Bottom Line: During 1983-1992, physicians' office MFP growth exceeded general economy MFP.For 1993-2000, physicians' office MFP growth was both negative and below general economy rates.For the most recent period analyzed, 2001-2004, physician's office MFP grew nearly as quickly as the general economy.
This article constructs measures of multifactor productivity (MFP) for physicians' offices using a variation of the productivity methodology developed by the U.S. Bureau of Labor Statistics (BLS) for other industries. Two alternatives measures are presented and both yield positive gains in physicians' office MFP over the study period. These increases lie below MFP rates for the general economy (private non-farm business sector). During 1983-1992, physicians' office MFP growth exceeded general economy MFP. For 1993-2000, physicians' office MFP growth was both negative and below general economy rates. For the most recent period analyzed, 2001-2004, physician's office MFP grew nearly as quickly as the general economy.
Mentions: Total input costs is the sum of the various input costs as previously described. The cost shares for the major inputs are computed by converting each to dollars (Table 4). Capital services are represented by ROE and depreciation. To simplify computations, annual weighted averages of the inputs are used in place of the Tornqvist-weighted MFP formulation used by BLS. Cost shares are multiplied by their respective inputs and summed to obtain a rate of change in total inputs. A similar computation for input prices yields changes in total input prices. These calculations show rapid accelerations in both input prices and quantities for 1983-1992, followed by rapid deceleration for input prices and moderate deceleration for input quantities over 1993-2000. For 2001-2004, input prices and quantities resumed their acceleration, at average annual rates of 4.2 and 4.3 percent, respectively (Figure 4).