Innovative methods of evaluating business efficiency: a comparative study

Abstract

This paper evaluates the efficiency level of medical spa businesses operating in Slovakia. The research aims to compile an efficiency ranking of these specific healthcare facilities to apply both methods and analyze their alternative use within the efficiency level measurement. The object of research is the Slovak spa businesses over the years 2014-2018. The study involved the Simplex Method of Linear Programming and the selected Data Envelopment Analysis model. In the study frame, the authors quantified the efficiency of medical spa businesses as the optimization task of SMPL and BCC input-oriented DEA model to identify prosperous businesses from non-prosperous ones. The study applied the Spearman rank correlation to reveal a potential degree of association of business rankings. The calculations were provided by the MS Excel, MS Excel Solver package, and the statistical program Gretl. The findings indicated that the business efficiency measured by SMPL provided similar results to the DEA model. These methods could be considered equivalent. Therefore, their alternative use was confirmed. The obtained results showed that both methods almost equally divided the businesses into two groups: 1) with efficiency score above (10 DMUs) and 2) below the overall achieved average (11 DMUs). According to the average results of both applied methods, the most efficient DMUs were DMU09 (Spa Lúcky, j.s.c.) and DMU03 (Spa Bojnice, j.s.c.), vice versa, the lowest efficiency score was achieved by DMU04 (Spa Brusno, j.s.c.). This research could be considered an important opportunity to identify new gaps in the prior literature and present the need for further development in these specific healthcare facilities, not only in Slovakia. The presented research findings are also beneficial for practice as they may lead to the formulation of recommendations for improvement of the current state of Slovak spa tourism and the spa businesses themselves.