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The Impact of Indigent Care on Output Congestion in Hospitals

In this paper, we examine whether indigent care provided by hospitals contributes to output congestion. An increase in output congestion could make the cost of delivering indigent care more costly than managers believe. We distinguish between charity (indigent) care and bad debt expense in an effort to understand the full cost of charity care. We use data from 128 Oklahoma hospitals to measure hospital productivity based upon analytical models developed in the paper using DEA methodology. Our results indicate that hospitals in this study experience roughly the same level of bad debt expense; however, hospitals differ in terms of technical efficiency due to the indigent care being delivered.