Managing Physician Efficiency and Effectiveness in Providing Hospital Services

Physicians control more than 80 percent of the decisions affecting health costs. Consequently, managing physician practice patterns is an important avenue to reducing health care costs. One approach to identifying inefficient practice patterns is demonstrated in this pilot study of physicians treating heart shock patients. Physicians are evaluated using data envelopment analysis (DEA), a relatively new linear-program-based efficiency evaluation tool. This approach (1) locates physicians using excess resources in treating patients, (2) estimates the amount of excess resources used, and (3) explicitly considers the quality of patient care in the overall assessment of the physician's practice patterns. Findings of physician inefficiency that are stable over time could be used to alter practice patterns and subsequently to assist in cost containment.