Hospital Multifactor Productivity: A Presentation and Analysis of Two Methodologies

In response to recent discussions regarding the ability of hospitals to achieve gains in productivity, we present two methodologies that attempt to measure multifactor productivity (MFP) in the hospital sector We analyze each method and conclude that the inconsistencies in their outcomes make it difficult to estimate a precise level of MFP that hospitals have historically achieved. Our goal in developing two methodologies is to inform the debate surrounding the ability of hospitals to achieve gains in MFP, as well as to highlight some of the challenges that exist in measuring hospital MFP.