Production efficiency in outpatient substance abuse treatment organizations.

Abstract

This study examines the determinants of technical efficiency in outpatient substance abuse treatment (OSAT) organizations, specifically drug-free units. The major hypothesis concerns the impact of ownership (for-profit, not-for-profit, and public) on productivity, controlling for the influence of funding arrangements, organizational characteristics, the regulatory and competitive environment and client-mix. Data for the research were collected from a national survey of OSAT units conducted at the Institute for Social Research at the University of Michigan in the fall of 1988. Efficiency was measured and analyzed with a two-stage methodology. First, "data envelopment analysis" (DEA) was used to calculate relative efficiency scores for each sample unit. Inputs in the production process were defined as capital, treatment hours delivered by professional staff and non-professional staff. Outputs were defined as individual, group and other types of therapy hours. Second, the resulting efficiency scores were used as the dependent variable in a regression where the predictors were the determinants of efficiency listed above. A two-part regression plan was used to control for selection effects, i.e., prediction of the probability of being efficient and the impact of these characteristics on the level of efficiency. Overall, for-profit units were found to be approximately 2 percent more efficient than public units. For-profit units, however, were found to be either highly efficient or very inefficient. Additionally, the market structure in which the firms operate had significant consequences for efficiency outcomes, as did the arrangements under which revenues were received. Factors describing client-mix were less important. In sum, productivity in OSAT is influenced by the firm's objectives, as measured by ownership status, but all treatment units in the system can benefit by understanding the relationships between efficiency and organizational and environmental factors.