Measuring the Relative Performance of Providers of a Health Service

73 Pages Posted: 21 Jul 2001 Last revised: 15 Feb 2002

See all articles by Daniel A. Ackerberg

Daniel A. Ackerberg

University of California, Los Angeles (UCLA) - Department of Economics

Matilde Pinto Machado

Universidad Carlos III de Madrid - Department of Economics

Michael H. Riordan

Columbia University - Columbia Business School

Date Written: July 2001

Abstract

A methodology is developed and applied to compare the performance of publicly funded agencies providing treatment for alcohol abuse in Maine. The methodology estimates a Wiener process that determines the duration of completed treatments, while allowing for agency differences in the effectiveness of treatment, standards for completion of treatment, patient attrition, and the characteristics of patient populations. Notably, the Wiener process model separately identifies agency fixed effects that describe differences in the effectiveness of treatment ('treatment effects'), and effects that describe differences in the unobservable characteristics of patients ('population effects'). The estimated model enables hypothetical comparisons of how different agencies would treat the same populations. The policy experiment of transferring the treatment practices of more cost-effective agencies suggests that Maine could have significantly reduced treatment costs without compromising health outcomes by identifying and transferring best practices.

Suggested Citation

Ackerberg, Daniel A. and Machado, Matilde P and Riordan, Michael H., Measuring the Relative Performance of Providers of a Health Service (July 2001). NBER Working Paper No. w8385. Available at SSRN: https://ssrn.com/abstract=277405

Daniel A. Ackerberg (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
405 Hilgard Avenue
Los Angeles, CA 90095-1477
United States

Matilde P Machado

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34 91 624 9571 (Phone)
+34 91 624 9875 (Fax)

Michael H. Riordan

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States
212-854-6984 (Phone)

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