Home 2010 - Volume 10(2) Hospital Efficiency: Concept, Measurement Techniques and Review of Hospital Efficiency Studies
Hospital Efficiency: Concept, Measurement Techniques and Review of Hospital Efficiency Studies PDF Print E-mail
Friday, 11 February 2011 13:28

Hossein Moshiri, Syed Mohammed Aljunid, Rahmah Mohd Amin


In a time of rising demands on hospital reimbursement levels, focus on efficient operations is becoming more imperative. In health care systems, the measurement of efficiency is usually the first step in auditing individual performance of production units, e.g. hospitals, health centers, etc. It constitutes the rational framework for the distribution of human and other resources between and within health care facilities. The term efficiency is broadly used in economics and refers to the best utilization of resources in production. Typical example of efficiency is technical efficiency, referring to the effective use of resources in producing outputs. In the Farrell framework, a hospital is judged to be technically efficient if it is operating on the best practice production frontier in its hospital industry. In general, there are two main frontier methods in measuring efficiency. The first is Data Envelopment Analysis (DEA), a linear programming method which enables the measurement of efficiency consistent with the theoretically based concept of production efficiency. DEA typically examines the relationship between inputs to a production process and the outputs of that process. The second technique for assessing efficiency that is employed is Stochastic Frontier Analysis (SFA). This is an econometric technique to estimate a conventional function; with the difference being that efficiency is measured using the residuals from the estimated equation. The error term is therefore divided into a stochastic error term and a systematic inefficiency term.

Key words: Efficiency, Technical efficiency, Hospital Efficiency, DEA, SFA, Frontier method

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Last Updated on Sunday, 13 February 2011 03:51


ISSN No : 1675-0306
e-ISSN No : 2590-3829

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