Title: Frontier analysis in healthcare

Authors: C.A. Knox Lovell

Addresses: Department of Economics, University of Georgia, Athens, GA 30602, USA

Abstract: Frontier techniques can be of immense use in establishing the best practice benchmarks against which the performance of healthcare providers can be evaluated. If credible benchmarks are set by frontier techniques, then reimbursement schemes can be guided by the performance of individual providers. Although frontier techniques have gained acceptance in other regulatory arenas, their potential remains unfulfilled in healthcare. This paper speculates on the strengths and weaknesses of the application of frontier techniques in healthcare reimbursement schemes, although the main objective is to introduce the readers to the basics of the techniques. Two techniques are considered; one is regression-based and the other is based on linear programming techniques. Each technique has its own relative advantage depending on the confidence generated by the underlying data or the ability to model a complex service delivery technology.

Keywords: frontier analysis; best practice; cost containment; healthcare benchmarking; healthcare reimbursement; service delivery technology.

DOI: 10.1504/IJHTM.2006.007870

International Journal of Healthcare Technology and Management, 2006 Vol.7 No.1/2, pp.5 - 14

Published online: 29 Sep 2005 *

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