Products: DEA

The NHS is experiencing a financial crisis mainly due to rising healthcare costs, increasing demand and funding constraints. To ensure cost effective high quality healthcare delivery within a rapidly changing NHS political and structural context, it is essential to accurately determine the value of current and future physical infrastructure. Several initiatives and approaches, such as: Commissioners Investment and Asset Management Strategy (CIAMS); Quality Innovation Productivity and Prevention (QIPP); and NHS Premises Assurance Model (PAM) have been developed by the Department of Health (DH) and Community Health Partnership (CHP) to address some of the related issues. With all these tools, there is still a lack of robust appraisal mechanisms that evaluate essential links between the quality of the physical built environment and its impact on patients’ health gain. There is thus a need for a business case appraisal mechanism that accounts for both financial value and service value of healthcare infrastructure.

Developing a mathematical model for value benchmarking based on Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) is part of what we do within Healthy Infrastructure. DEA has proven to be a competent tool for measuring and benchmarking performance based on multiple inputs and multiple outputs. SFA, on the other hand, enables the model to handle statistic noise inherent in the deterministic models such as DEA. The model we use integrates these two approaches to establish value benchmarks in different health settings. It also facilitates planning scenarios for improving different value indicators to achieve the optimum value. Case studies are used to pilot the model as an investment appraisal tool, together with interviews and focus groups to validate case study analyses.

The outcome is a methods to tackle challenges faced by decision-makers in healthcare by integrating different aspects of infrastructure value (including Investment related inputs and health gain outputs). This is done through introducing a new appraisal mechanism to support better investment decision making based on the evidence within healthcare industry and broader academia. The case studies assess the potential of the model for being adopted within the UK context.

This mechanism is primarily a decision-making tool for the appraisal of the value of different investment options in healthcare infrastructure (e.g. do nothing, refurbish, expand, reduce, new build, disuse, demolish, etc.). It can be applied to decision-makings within different scale levels, from whole Trusts down to buildings, departments, clusters of spaces and rooms for infrastructure improvement. It can also suggest scenarios for optimising the value of healthcare infrastructure according to the vision of the providers by introducing benchmarks and role model peers and by proposing back-casting scenarios.

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