Abstract
<p class="1main-text">This article aims to evaluate the relative technical efficiency of the three clinics belonging to the University Hospital of the Federal University of Santa Catarina, RS, Brazil, in a two years period. The specification of the econometric model includes the analysis of productive sectors from the same institution in different periods of time. A stochastic frontier cost CD function using the composed error model was estimated by maximum likelihood (MLE) for a monthly data panel. The efficiency measures were computed using the formula adapted to the costs, based on parameters estimated by MLE. The results are encouraging and intriguing, especially regarding the inclusion of new variables, the expansion of the sample and the real utility of the efficiency ratios in the effective management task of productive resources within a single firm.</p>
Highlights
The traditional econometric produces an average estimation of cost or production function, which is incompatible with the conception of a certain region of minimum cost for different levels of product or maximum product for different input levels
In order to make the application of the panel model presented in previous section, it has been tested by three medical clinics in an activity at University Federal Hospital of Santa Catarina
The technologies involved in each clinic may be considered equivalents
Summary
The traditional econometric produces an average estimation of cost or production function, which is incompatible with the conception of a certain region of minimum cost for different levels of product or maximum product for different input levels. Farrell (1957) developed empirically the minimum cost idea, assuming a production function with constant returns of scale and decomposing the efficiency into: technical and allocative. Farrell (1957) developed empirically the minimum cost idea, assuming a production function with constant returns of scale and decomposing the efficiency into: technical and allocative In this way, the excessive use of input is interpreted as technically inefficient because it is possible to reduce all of them proportionally without reducing the product level while the allocative inefficiency is related with incorrect proportions in the use of factors. The ratio of the distance from the origin of the actual isocost line to the line least-cost tangency isocost line expresses a measurement on the degree of cost inefficiency Implementation of this idea has being developed by mathematical programming (through Data Envelopment Analysis - DEA) and econometric method. In these but, in other developments it is common the fact that they direct exclusively in comparison between firms
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