Effectiveness and Other Models of DEA

The two components of health care facility performance, efficiency and effectiveness quality), were introduced in Chap. 1. In this chapter, a closer examination of the effectiveness component is provided. Sherman and Zhu (2006) introduce qualityadjusted DEA applied to bank branches. In this discussion, they incorporate quality into DEA benchmarking in two different models. The first model adds a quality variable as an additional output into the standard DEA model. They demonstrate that, using this approach, the model may exhibit a quality/efficiency tradeoff. Of course in health care, managers would not welcome such a tradeoff sacrificing quality for efficiency. The second approach, which avoids such tradeoffs, is an evaluation of quality and efficiency independently. Using the hospital example, we illustrate these concepts below.