Japan's healthcare expenditures, which are largely publicly funded, have been growing dramatically due to the rapid aging of the population as well as the innovation and diffusion of new medical technologies. Annual costs for surgical treatments are estimated to be approximately USD 20 billion. Using unique longitudinal clinical data at the individual surgeon level, this study aims to estimate the technical efficiency of surgical treatments across surgical specialties in a high-volume Japanese teaching hospital by employing stochastic frontier analysis (SFA) with production frontier models. We simultaneously examine the impacts of potential determinants that are likely to affect inefficiency in operating rooms. Our empirical results show a relatively high average technical efficiency of surgical production, with modest disparity across surgical specialties. We also demonstrate that an increase in the number of operations performed by a surgeon significantly reduces operating room inefficiency, whereas the revision of the fee-for-service schedule for surgical treatments does not have a significant impact on inefficiency. In addition, we find higher technical efficiency among surgeons who perform multiple daily surgeries than those who perform a single operation in a day. We suggest that it is important for hospital management to retain efficient surgeons and physicians and provide efficient healthcare services given the competitive Japanese healthcare market.
Keywords: Japanese fee-for-service system; Operating rooms; Stochastic frontier analysis; Surgical production; Technical efficiency.