Input measures included hospital bed size, service mix, labor force size, and nonlabor operating expense. Service mix is the sum of the number of services, both inpatient and outpatient services, offered by the hospital. Labor force size equaled the number of nonphysician, fulltime employees plus the weighted (using a weight of 0.5) number of part time personnel employed. We used case-mix-adjusted admissions and outpatient visits as output measures. Case-mix-adjusted admissions were calculated as the number of hospital admissions multiplied by the hospital’s average Medicare case mix. These input and output variables are commonly used in previous studies (Chern & Wan, 2000; Ozcan, 2008). The primary data source for these variables was the AHA annual survey. We calculated efficiency scores for each hospital using the DEA frontier Excel software (Sherman & Zhu,
2006). Lower efficiency scores calculated through this soft- ware are interpreted as a hospital being relatively less efficient. If a hospital’s efficiency score equals 1, the hos- pital is categorized as efficient (Ozcan, 2008; Sherman & Zhu, 2006).