Evaluating the Impact of Hospital Efficiency on Wellness in the Military Health System

Like all health care delivery systems, the U.S. Department of Defense Military Health System (MHS) strives to achieve top preventative care and population health outcomes for its members while operating at an efficient level and containing costs. The objective of this study is to understand the overall efficiency performance of military hospitals and investigate the relationship between efficiency and wellness. This study uses data envelopment analysis and stochastic frontier analysis to compare the efficiency of 128 military treatment facilities from the Army, Navy, and Air Force during the period of 2011 to 2013. Fixed effects panel regression is used to determine the association between the hospital efficiency and wellness scores. The results indicate that data envelopment analysis and stochastic frontier analysis efficiency scores are congruent in direction. Both results indicate that the majority of the MHS hospitals and clinics can potentially improve their productive efficiency by managing their input resources better. When comparing the performance of the three military branches of service, Army hospitals as a group outperformed their Navy and Air Force counterparts; thus, best practices from the Army should be shared across service components. The findings also suggest no statistically significant, positive association between efficiency and wellness over time in the MHS.