The purchase of technology in health organisations: an analysis of its impact on performance
| DOI | https://doi.org/10.1108/JOPP-09-01-2009-B004 |
| Date | 01 March 2009 |
| Published date | 01 March 2009 |
| Pages | 109-131 |
| Author | Alessandro Ancarani,Carmela Di Mauro,M. Daniela Giammanco |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 9, ISSUE 1, 109-131 2009
THE PURCHASE OF TECHNOLOGY IN HEALTH ORGANISATIONS:
AN ANALYSIS OF ITS IMPACT ON PERFORMANCE
Alessandro Ancarani, Carmela Di Mauro and
M. Daniela Giammanco*
ABSTRACT. The paper presents an investigation carried out in an Italian
health organisation, aimed at studying the purchasing process of medical
equipment at the hospital ward level, and at assessing its impact on hospital
ward performance. A model of the decision process that leads to purchase is
developed. The results show that the acquisition of technology has a positive
impact on the ward’s relative efficiency, and that efficiency is further linked
to the specific goals pursued by the head of ward and by the constraints
faced.
INTRODUCTION
The tightening of budget constraints and the introduction of
managed competition schemes in the health sector bring to attention
the role that investment in technology plays in determining
performance and quality improvement. There is, however, limited
evidence on how the purchase of medical technology by hospitals is
related to indicators concerning activity levels, finance, and quality.
----------------------------
* Alessandro Ancarani, Ph.D., is an Associate Professor, Department of Civil
and Environmental Engineering, University of Catania (Italy). His research
interest is in public procurement, public service evaluation, and outsourcing
strategies. Carmela Di Mauro, Ph.D., is an Associate Professor, Dipartimento
di Analisi dei Processi Politici, Sociali ed Istituzionali, University of Catania.
Her research interest is in health economics, health care evaluation, and
experimental economics. Maria Daniela Giammanco, M.A., is an Assistant
Professor, Dipartimento di Analisi dei Processi Politici, Sociali ed Istituzionali,
University of Catania. Her research interest is in health economics and health
care evaluation.
Copyright © 2009 by PrAcademics Press
110 ANCARANI, MAURO & GIAMMANCO
Likewise, little attention has been paid to the decision
mechanisms governing the acquisition of technology. In many
countries, the health sector is strongly characterised by the presence
of public organisations, and this implies that the profit maximisation
assumption must be replaced with alternative objectives. There are
two major actors influencing the acquisition of technology. The
hospital management, whose principal goals are efficiency and
quality, and the physicians, with their own goals and constraints, who
are the internal customers. The consequences of this dual decision
process, which makes the health sector rather unique, may be over-
investment and excess capacity (Newhouse, 1970). The effects of
slack investment are ambiguous: on the one hand, it may lead to
inefficiency (Lee, 1971). On the other, slack may also propel
innovation and may increase health enhancing quality (Picone et al.,
2003).
While there are several empirical contributions which have
analysed hospital capital investment at the macro level (Rodriguez-
Alvarez & Knox Lovell, 2004), to our knowledge less attention has
been paid to how the purchase of technology takes place within
hospitals. The present paper investigates in such a direction, with
reference to the Italian health sector. The paper presents an
investigation carried out in a large Italian Public Health Organisation,
aimed at studying the purchasing process at the hospital ward level,
and at assessing its impact on hospital ward performance.
Our research hypotheses are that the acquisition of technology
has an impact on the ward’s relative efficiency, i.e. it is related to
efficiency measures, and that efficiency is further linked to the
specific goals pursued by the head of ward and by the constraints
faced. In order to test these hypotheses, we proceed in three steps.
First, a model of the decision process that leads to the purchase of
medical equipment is developed; next, a production frontier
technique, namely data envelopment analysis (Charnes, Cooper &
Rhodes, 1978), is applied to estimate the relative efficiency of the
wards under analysis. Finally, a cluster analysis is adopted to
investigate whether the ward’s goals and constraints are related to
efficiency.
Our model of technology acquisition is grounded in the economic
literature on non-profit hospital behaviour, with a special emphasis on
how the hospital actors’ goals and constraints are related to the
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