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Hospital multifactor productivity: a presentation and analysis of two methodologies.

Cylus JD, Dickensheets BA - Health Care Financ Rev (2007-2008 Winter)

Bottom Line: In response to recent discussions regarding the ability of hospitals to achieve gains in productivity, we present two methodologies that attempt to measure multifactor productivity (MFP) in the hospital sector.We analyze each method and conclude that the inconsistencies in their outcomes make it difficult to estimate a precise level of MFP that hospitals have historically achieved.Our goal in developing two methodologies is to inform the debate surrounding the ability of hospitals to achieve gains in MFP, as well as to highlight some of the challenges that exist in measuring hospital MFP.

View Article: PubMed Central - PubMed

Affiliation: Office of the Actuary (OACT), Centers for Medicare & Medicaid Services, Baltimore, MD 21244-1850, USA. Jonathan.Cylus@cms.hhs.gov

ABSTRACT
In response to recent discussions regarding the ability of hospitals to achieve gains in productivity, we present two methodologies that attempt to measure multifactor productivity (MFP) in the hospital sector. We analyze each method and conclude that the inconsistencies in their outcomes make it difficult to estimate a precise level of MFP that hospitals have historically achieved. Our goal in developing two methodologies is to inform the debate surrounding the ability of hospitals to achieve gains in MFP, as well as to highlight some of the challenges that exist in measuring hospital MFP.

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Average Annual Percent Change in Hospital Multifactor Productivity (MFP) for Method 2 and Sensitivity 2: 1981-2005
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f5-hcfr-29-2-049: Average Annual Percent Change in Hospital Multifactor Productivity (MFP) for Method 2 and Sensitivity 2: 1981-2005

Mentions: In Sensitivity 2, we calculate an alternative measure of labor quantities using only CES data. The total number of hospital employees is multiplied by average weekly hours for hospital production workers, and this number is multiplied by 52 weeks per year.17 These new labor quantities are substituted into Method 2 to derive an alternative calculation of hospital MFP. The correlation coefficient between Method 2 and Sensitivity 2 is positive at 0.66 (Figure 5). From 2001-2005, the average annual hospital MFP in Sensitivity 2 was 0.3 percent compared to 1.0 percent in the original Method 2. The 10-year average hospital MFP in Sensitivity 2 was 0.1 percent for the 10-year period ending in 2005, compared to 0.6 percent in Method 2 (Table 1). The 10-year moving average over the entire period was equal to 0.1 percent compared to 0.0 percent originally. Although the data do not trend exactly on a year-by-year basis, the overall long-term results appear consistent (Figure 6).


Hospital multifactor productivity: a presentation and analysis of two methodologies.

Cylus JD, Dickensheets BA - Health Care Financ Rev (2007-2008 Winter)

Average Annual Percent Change in Hospital Multifactor Productivity (MFP) for Method 2 and Sensitivity 2: 1981-2005
© Copyright Policy
Related In: Results  -  Collection

Show All Figures
getmorefigures.php?uid=PMC4195020&req=5

f5-hcfr-29-2-049: Average Annual Percent Change in Hospital Multifactor Productivity (MFP) for Method 2 and Sensitivity 2: 1981-2005
Mentions: In Sensitivity 2, we calculate an alternative measure of labor quantities using only CES data. The total number of hospital employees is multiplied by average weekly hours for hospital production workers, and this number is multiplied by 52 weeks per year.17 These new labor quantities are substituted into Method 2 to derive an alternative calculation of hospital MFP. The correlation coefficient between Method 2 and Sensitivity 2 is positive at 0.66 (Figure 5). From 2001-2005, the average annual hospital MFP in Sensitivity 2 was 0.3 percent compared to 1.0 percent in the original Method 2. The 10-year average hospital MFP in Sensitivity 2 was 0.1 percent for the 10-year period ending in 2005, compared to 0.6 percent in Method 2 (Table 1). The 10-year moving average over the entire period was equal to 0.1 percent compared to 0.0 percent originally. Although the data do not trend exactly on a year-by-year basis, the overall long-term results appear consistent (Figure 6).

Bottom Line: In response to recent discussions regarding the ability of hospitals to achieve gains in productivity, we present two methodologies that attempt to measure multifactor productivity (MFP) in the hospital sector.We analyze each method and conclude that the inconsistencies in their outcomes make it difficult to estimate a precise level of MFP that hospitals have historically achieved.Our goal in developing two methodologies is to inform the debate surrounding the ability of hospitals to achieve gains in MFP, as well as to highlight some of the challenges that exist in measuring hospital MFP.

View Article: PubMed Central - PubMed

Affiliation: Office of the Actuary (OACT), Centers for Medicare & Medicaid Services, Baltimore, MD 21244-1850, USA. Jonathan.Cylus@cms.hhs.gov

ABSTRACT
In response to recent discussions regarding the ability of hospitals to achieve gains in productivity, we present two methodologies that attempt to measure multifactor productivity (MFP) in the hospital sector. We analyze each method and conclude that the inconsistencies in their outcomes make it difficult to estimate a precise level of MFP that hospitals have historically achieved. Our goal in developing two methodologies is to inform the debate surrounding the ability of hospitals to achieve gains in MFP, as well as to highlight some of the challenges that exist in measuring hospital MFP.

Show MeSH