Data Envelopment Analysis

GOLIK NataliaRELLAMA Anna

Some terminologies related to DEA DEA and its History What DEA is and where it can be applied What makes DEA different from all the other

methods The DEA Model and its Constraints An example related to Health Care Service

Management

Overview

EFFICIENCY - using the minimum number of

inputs for a given number of outputs INPUT – work hours, condition of patient,

supplies OUTPUT – final condition of the patient, visits LINEAR PROGRAMMING

A mathematical technique for maximizing or minimizing a linear function of several variables, such as output or cost (Webster).

Terminologies

1980s – Improved the efficiency of health care

delivery through fixed pricing mechanism of DRGs (diagnostic related groupings).

1990s – Extended to physicians’ services There was a need for a greater understanding

because of physician specialization; the systems were too different.

Data Envelopment AnalysisBy Charnes et al.

How it came to be

Data Envelopment Analysis A linear programming application aimed at

evaluating the efficiencies of similar decision-making units (DMUs) based upon the inputs and outputs associated with the DMUs.

What is DEA?

It can help managers:

Assess their organization’s relative performance, and identify top performance in the health care market, and

Identify ways to improve their performance, if their organization is not one of

the top performing organizations.

Why use the DEA?

What does it mean to be efficient?

Maximizing output with keeping input constant. Minimizing input with keeping output constant. Or both, at the same time.

How? Efficiency scores – a score attained through the

DEA method ranging from 0 to 1, with 1 being the most efficient.

Total weighted Output / Total weighted Input

It’s all about evaluating EFFICIENCY.

It identifies the optimal ways of performance

rather than the averages. In today’s world, no health care institution can

afford to be an average performer in a competitive health market.

What makes it different

The DEA model A list of the inputs A list of the outputs The program

You can make one on your own, but you can also hire someone to make it for you. It can also be bought or downloaded legally online.

Necessary

The Model

Objective

Formula

Efficiency score

Selected output of each facility in the set o.

Selected input of each facility in the set o.

Weights

The Constraints

The input and output values, as well as all weights are assumed by the formulation to be greater than or equal to zero; the efficiency score less than or equal to 1.

Example

Which inputs need to be reduced to increase efficiency in H2, H6, H7 and H10?

How do we know which of the inputs need improvement?

How do we know which of the outputs need augmenting?SLACKS

Let’s wrap it up!

Data Envelopment Analysis is a method that health care service managers can use to evaluate the efficiency of each of their decision making units (DMUs).

It is helpful in determining whether your management system is among the most efficient and, if you are not the most efficient, how you can improve the efficiency of your DMUs.

Ozcan, Yasar. Health Care Benchmarking and Performance Evaluation: An Assessment using Data

Envelopment Analysis (DEA). 2008. Ozcan, Yasar. Quantitative Methods in Health Care Management: Techniques and Applications. San Francisco,

California: 2009. Images from:

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References