Nonparametric Optimization of Preference in Technical Efficiency in China

Abstract

Applying nonparametric path-converged approach, the research innovatively provides the measurement of preference in technical efficiency by the ratio of labor elasticity to capital elasticity and further attempts to realize the optimization of preference in technical efficiency by a strategy of 30% abolishment of initial Drug Addition and a strategy with combination of smoothed governmental fiscal expenditure, which sheds fresh light on promoting hospitals’ efficiency in China from perspective of management engineering. With sample data of provincial public hospitals in Zhejiang Province during period of 200901-201306, the research obtains following conclusions. First, benchmark preference in technical efficiency shows production has shifted from physical capital preference to labor skilled preference in technical efficiency. Second, the changing trend of preference in technical efficiency validates initial Drug Addition and governmental fiscal expenditure pushes and restrains the labor skilled preference in technical efficiency respectively. Third, the strategy of 30% abolishment of Drug Addition will strengthen labor skilled preference in technical efficiency with less promotion intensity of initial Drug Addition. The strategy with combination of governmental fiscal expenditure restrains labor skilled preference in technical efficiency. The facts validate great urgency of raising payments for doctors and nurses so as to promoting efficiency effectively.