Financial performance–efficiency nexus in public health services: A nonparametric evidence-based approach

Abstract

Public health services, as a preventive aspect of health care, are essential for the sustainability of the entire health care system. However, the context of public health services, which focus is primarily on prevention, is not a common setting when measuring the efficiency within nonparametric evidence-based approach. The aim of this study is to measure the efficiency of the financial performance of organizational units of the public health institute in Croatia, the Health Ecology Department in particular, during the period 2016–2018 using data envelopment analysis. Among the many reasons behind choosing this nonparametric method is the fact that it identifies the sources of inefficiency and specifies the directions and magnitudes of improvements required. Two input-oriented models – CCR under constant and BCC under variable returns-to-scale assumption – are employed for evaluating three types of efficiency – technical, pure technical and scale efficiency. Two hypotheses are examined and empirically confirmed: first, that there is significant between-unit variability in financial performance, and second, that investments are the major source of inefficiency among the observed indicators. The results have additionally revealed that the mentioned differences are less pronounced in the case of pure technical efficiency, implying that the overall inefficiency of the Health Ecology Department units can be generally attributed to scale efficiency. Besides, only three out of twelve department units are considered efficient. The implications of the research results are aimed at further research and testing the efficiency of the entire network of public health institutes, as well as to provide policy makers with new insights when considering different modes of organizing and delivering public health services.