Title: The impact of health care financing reform on the productivity change in Finnish hospitals

Author: Miika Linna

Status: Systems Analysis Laboratory Research Reports A79, May 1999


Keywords: Hospital financing, Hospitals, Productivity, Malmquist indices

The purpose of this study was to analyse the development of productivity and efficiency in the production of hospital care in Finland during the period 1988-1994. A special interest was directed to the impact of health care financing reform in 1993. The analysis is based on the Malmquist index approach using linear programming. Positive productivity changes were found particularly towards the end of the observation period, although a few years did not show significant improvements in productivity and efficiency.

There was a significantly higher rate of productivity 1992 - 1993 and 1993 - 1994, suggesting that the state subsidy reform in 1993 may have strengthened hospitalsí efforts to improve performance. The use of output based reimbursement was not markedly associated with increased efficiency or productivity.