Analysis of the Efficiency Determinants of Health Systems in OECD Countries by DEA and Panel Tobit

Abstract

In recent years, almost all countries around the world face budget cuts in health spending, which force public and private hospitals in these countries to use their resources effectively and to provide more efficient health care. In this context, the present study evaluates hospital efficiency across 29 OECD countries between 2000 and 2010 and investigates the determinants affecting hospitals’ activities. In the first stage of the two-stage performance analysis, efficiency scores of the hospitals were measured by data envelopment analysis (DEA) while, in the second stage, Panel Tobit Analysis was used to identify the environmental factors that affect the efficiency scores obtained in the first stage. The paper also explores the changes in the factor efficiency compared to the previous years by decomposition through the Malmquist Productivity Index. In the first stage, it was found that the efficiency scores achieved after 2000 began to decline in 2004 and reached their lowest levels between 2009 and 2010. The highest slack values were found in the figures regarding tomography, MR, and nurses, respectively. In the second stage, due to the censored nature of the dependent variable obtained by DEA, in order to achieve consistent and unbiased estimators, the use of Panel Tobit Analysis was proposed. Estimations showed that, among the environmental factors that secondarily affect hospital efficiency, income, education and number of private hospitals affect efficiency in a positive way, while the effects of public and private health expenses and the number of public hospitals on such efficiency was negative.