Exploring Why Some Physicians’ Hospital Practices are More Efficient: Taking DEA Inside the Hospital

Abstract

Perhaps it is no longer startling to Americans that more than $2 billion a day is spent on their medical care. But two additional facts may be surprising. First, although physicians account for less than 20% of those expenditures, they control up to 80% of the expenditure decisions (Eisenberg, 1986). Second, research has begun to reveal wide variations in the way physicians practice medicine (Eisenberg, 1986). Moreover, these findings have led some to speculate that rising hospital costs may be more the result of clinical inefficiency owing to excessive physician utilization of hospital resources than of waste owing to managerial inefficiency (Eisenberg, 1986; Chilingerian and Sherman, 1987; Young and Saltman, 1983; Aaron and Schwartz, 1984; Enthoven, 1980).