Standard Estimation, Standard Tightness, and Benchmarking: A Method with an Application to Nursing Services
Posted: 8 Sep 1998
This paper presents a new method for estimating standards. Prior accounting research suggests the need for flexibility in setting standards in order to allow managers to make trade-offs between efficiency and attainability, and also between inputs with different relative prices to minimize cost. Stochastic Data Envelopment Analysis (SDEA) is adapted to introduce flexibility in setting standards and deriving mix and yield variances relative to comparative data from historical records or from other organizations. This approach to relative performance evaluation and benchmarking has practical appeal since industry level data is increasingly being shared as, for example, in the health care sector. Hospital nursing cost data are used to illustrate this approach.
JEL Classification: M40, M46
Suggested Citation: Suggested Citation