Regional Differences in the Efficiency of Health Production: An Artefact of Spatial Dependence?

18 Pages Posted: 20 Oct 2009 Last revised: 24 Oct 2009

See all articles by Stefan Felder

Stefan Felder

Otto von Guericke Universitaet Magdeburg

Harald Tauchmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Date Written: June 1, 2009

Abstract

The inefficiency of health care provision presents a major health policy concern in Germany. In order to address the issue of efficiency comprehensively - i.e., at the level of the entire system of health care provision rather than individual service providers - empirical analyses are often based on data at the regional level.However, regional efficiencies might be subject to spatial dependence, rendering any analysis biased that aims at identifying the determinants of efficiency differentials. We address this issue by specifying a spatial autoregressive model to explain efficiency scores for German districts which we derive through data envelopment analysis. Regression results suggest that spatial dependence is not a dominant feature in the data. Hence, ignoring spatial interdependence is unlikely to severely bias results of efficiency analyses based on regional data.This holds, in particular, for the role of the states in the efficiency of health production. Significant heterogeneity among states is found in the data regardless of whether or not spatial dependence is accounted for.

Keywords: Health production, data envelopment analysis, spatial autoregressive model

JEL Classification: I12, R10

Suggested Citation

Felder, Stefan and Tauchmann, Harald, Regional Differences in the Efficiency of Health Production: An Artefact of Spatial Dependence? (June 1, 2009). Ruhr Economic Paper No. 112, Available at SSRN: https://ssrn.com/abstract=1491073 or http://dx.doi.org/10.2139/ssrn.1491073

Stefan Felder

Otto von Guericke Universitaet Magdeburg ( email )

Universitaetsplatz 2
Institute fur Sozialmedizin
39106 Magdeburg
Germany

Harald Tauchmann (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

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