MEASURING HOSPITAL EFFICIENCY THROUGH DATA ENVELOPMENT ANALYSIS WHEN POLICY-MAKERS' PREFERENCES MATTER. AN APPLICATION TO A SAMPLE OF ITALIAN NHS HOSPITALS

Abstract

In many countries, measuring the efficiency of health care services has become increasingly important since the early 1980s. In Italy, the devolution of the National Health Service (NHS) to regional governments, started in 2001 but not yet fully implemented, and the definition of national basic levels of public health care to be provided by each regional health care system has made it crucial to compare the relative performance of health care services both across different regions and across different Local Health Authorities (LHA) within each region. In this paper, we focus on measuring the technical efficiency of acute hospitals operating within a NHS, which provide important services within the basic package of public health care. To this purpose, we develop four DEA models to measure the levels of technical efficiency of 85 acute hospitals in Veneto, a region in Northern Italy. The empirical analysis allows us to evaluate the role of demand and weight restrictions and will provide some useful insights into the levels of efficiency of hospitals. The plan of the paper is the following. Section 2 briefly describes the main characteristics of DEA as a technique for measuring hospital technical efficiency. In section 3 we argue that precise value judgements are necessary in order to apply this method to the efficiency evaluation of hospitals operating within a National Health Service (NHS). These value judgements concern particularly the production technology and managers’ or policy-makers’ preferences for hospital output mix, and imply the adoption of constraints on input and/or on output weights. In section 4 we analyse the importance