Technical and scale efficiency in Romanian public hospitals: Estimating with Data Envelopment Analysis

Abstract

Abstract Hospitals are a major component of the health systems, due to the complexity of the medical services they deliver and the great resources consumption. They impact the performance of the health systems, the economic policies and the public health. Since performance is a multidimensional concept, the main technique used to get a proxy evaluation of performance in the healthcare sector is Data Envelopment Analysis. DEA measures the efficiency of the healthcare providers and allows comparative analysis to identify the best practice frontier. This study addresses the performance of Romanian public hospitals from the North-Eastern region of the country and measures technical and scale efficiency. DEA basic models were run under the assumptions of constant and variable returns to scale, in an input-oriented evaluation of a sample of 18 public hospitals. The results indicated that most of the hospitals are technically inefficient (89%) and these inefficiencies are in the form of scale inefficiency for 39% of the hospitals. The average efficiency scale value was of 82%, implying that the observed hospitals could have increased their outputs by 18% if they had reached the optimal scale. The conclusion of the paper is that the inefficiency of the compared hospitals is almost equally caused by the inefficient implementation of the production plan and by the divergence of the decision making units from the most productive scale size. This kind of efficiency analyses could support managers when planning hospitals activity and policy makers when planning resources allocation and implementation of new strategies for the health system governance.