Journal
HEALTH ECONOMICS
Volume 20, Issue -, Pages 19-34Publisher
WILEY
DOI: 10.1002/hec.1769
Keywords
hospital efficiency; stochastic frontier analysis; latent classes; management
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The paper explores the link between managerial performance and cost efficiency of 617 Japanese general local public hospitals in 1999-2007. Treating managerial performance as unobservable heterogeneity, the paper employs a panel data stochastic cost frontier model with latent classes. Financial parameters associated with better managerial performance are found to be positively significant in explaining the probability of belonging to the more efficient latent class. The analysis of latent class membership was consistent with the conjecture that unobservable technological heterogeneity reflected in the existence of the latent classes is related to managerial performance. The findings may support the cause for raising efficiency of Japanese local public hospitals by enhancing the quality of management. Copyright (C) 2011 John Wiley & Sons, Ltd.
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