title: Cost drivers and resource allocation in military health care systems.
abstract: This study illustrates the feasibility of incorporating technical efficiency considerations in the funding of military hospitals and identifies the primary drivers for hospital costs. Secondary data collected for 24 U.S.-based Army hospitals and medical centers for the years 2001 to 2003 are the basis for this analysis. Technical efficiency was measured by using data envelopment analysis; subsequently, efficiency estimates were included in logarithmic-linear cost models that specified cost as a function of volume, complexity, efficiency, time, and facility type. These logarithmic-linear models were compared against stochastic frontier analysis models. A parsimonious, three-variable, logarithmic-linear model composed of volume, complexity, and efficiency variables exhibited a strong linear relationship with observed costs (R(2) = 0.98). This model also proved reliable in forecasting (R(2) = 0.96). Based on our analysis, as much as $120 million might be reallocated to improve the United States-based Army hospital performance evaluated in this study.
authors: Center for Army Medical Department Strategic Studies, U.S. Army Department Center and School, Fort Sam Houston, TX 78234-5047, USA.
authors: Larry
authors: L
authors: Fulton
authors: Leon S
authors: LS
authors: Lasdon
authors: Reuben R
authors: RR
authors: McDaniel
mesh_terms: D003361:Cost Allocation / Q000379:methods* / Q000706:statistics & numerical data; D003660:Decision Support Systems, Management; D017598:Efficiency, Organizational / Q000191:economics; D005240:Feasibility Studies; D005544:Forecasting; D017721:Hospital Costs / Q000706:statistics & numerical data* / Q000639:trends; D006772:Hospitals, Military / Q000191:economics*; D006801:Humans; D008887:Military Medicine / Q000191:economics*; D017059:Models, Econometric; D011382:Programming, Linear; D040841:Resource Allocation / Q000191:economics* / Q000379:methods / Q000706:statistics & numerical data; D013269:Stochastic Processes; D014481:United States