Budgetary performance diversity among Israeli governmental hospitals – Managerial qualifications or possible budget allocation inequity?

Abstract

Abstract Purpose The paper presents a method to indicate whether diversity in hospitals’ budgetary performance may be (at least partially) attributable to budget allocation inequity rather than to managerial qualification alone. Design The null hypothesis was that budgetary performance is solely attributable to managerial capabilities and operational efficiency. If we can introduce and simulate an alternative allocation formula revealing the same or a better overall budgetary performance while it re-ranks hospitals (by budgetary performance) then the null hypothesis may be rejected as this diversity may be attributable (by part) to allocation inequity. We analyzed 11 Israeli governmental general hospitals during 1998–2004. An alternative budget allocation formula was introduced through a mathematical model and was simulated as alternative budget allocation. Findings Both budget allocations and actual expenditures strongly correlated with that of the previous year (r2 = 0.99, 0.97, respectively) exhibiting repetitive patterns over the consecutive years. The alternative budget allocation simulation reduces overall budgetary performance diversity and re-rank hospitals (by budgetary performance) differently. Conclusions Budget allocation was strongly historical driven and hospitals' budgetary performance exhibited persistent pattern and rank. The hospitals re-ranked differently following an alternative budget simulation. Hence, the null hypothesis was rejected and we concluded that budgetary performance diversity between hospitals may be (at least partially) attributable budget allocation inequity. This paper offers a simple method to indicate the possibility of budget allocation inequity in terms of uncertainty. Our method is applicable to related hospitals (such as of national or regional healthcare system, hospitals network, or those sharing the same owner).