Abstract
This paper is a first attempt to examine efficiency in the Zimbabwean hospital sector using the non-parametric data envelopment analysis (DEA) methodology. The paper evaluates whether for-profit hospitals are significantly more efficient than non-profit hospitals in order to shed some light on the role of profit incentives as implied by the theory of property rights. DEA findings revealed that there was a marked deviation of efficiency scores from the best practice frontier with for-profit hospitals having the highest mean overall technical efficiency (OTE) score of 61.4%. The mean OTE scores for mission and public hospitals were 35% and 50.3% respectively. Evidence from the second stage, Tobit model suggested that while both for-profit hospitals and government hospitals were both important in influencing efficiency, for-profit hospitals had a higher marginal mean efficiency score than government hospitals. Key words: Profit incentives, data envelopment analysis, allocative efficiency, overall technical efficiency, pure technical efficiency, scale efficiency, Censored Tobit model.
Highlights
The World Bank’s study conducted by Akin et al (1987) indicated that apart from the problems of allocation and inequity in African health care systems, one of the major challenges in developing countries is inefficiency
According to Farrell (1957) who pioneered most of the work on efficiency measurement, the efficiency of a firm consists of technical efficiency and allocative efficiency
The aim of this section is to present empirical results obtained from the data envelopment analysis (DEA) model over a sample of 100 hospitals classified as private for-profit, private not-for profit and public or state owned hospitals
Summary
This paper is a first attempt to examine efficiency in the Zimbabwean hospital sector using the nonparametric data envelopment analysis (DEA) methodology. The paper evaluates whether for-profit hospitals are significantly more efficient than non-profit hospitals in order to shed some light on the role of profit incentives as implied by the theory of property rights. DEA findings revealed that there was a marked deviation of efficiency scores from the best practice frontier with for-profit hospitals having the highest mean overall technical efficiency (OTE) score of 61.4%. The mean OTE scores for mission and public hospitals were 35% and 50.3% respectively. Evidence from the second stage, Tobit model suggested that while both for-profit hospitals and government hospitals were both important in influencing efficiency, for-profit hospitals had a higher marginal mean efficiency score than government hospitals
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