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New AHRQ report examines health care efficiency measurement

The Agency for Healthcare Research and Quality (AHRQ) has released a new report showing wide variation in how payers, providers, and others define and evaluate the efficiency with which hospitals and physicians provide medical care. With no uniform agreement on the definition of efficiency, the results of these analyses depend largely on the perspective of the evaluator. For example, when health plans evaluate physicians or hospitals they often use measures such as the cost per episode or discharge; employers may use cost per covered life when evaluating health plans; and hospitals analyzing physician staff practice may use the number of physician hours employed in patient care or number of patients within a specific time period.

The report also shows that efficiency measures and methods published in peer-reviewed journals have not been incorporated into measures currently used for public reporting or pay for performance. In addition, the report found that efficiency measures, peer-reviewed or elsewhere, generally have not been validated and evaluated for such uses. Moreover, almost none include a quality dimension.

The report was based on a research review led by Elizabeth A. McGlynn, Ph.D., at the AHRQ-supported Southern California-RAND Corporation Evidence-based Practice Center in Santa Monica, California.

Copies of Identifying, Categorizing, and Evaluating Health Care Efficiency Measures (AHRQ Publication No. 08-0030) are available online at or from the AHRQ Publications Clearinghouse.

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