Technical and Scale Efficiency of Public District Hospitals in Kedah, Malaysia

Abstract

In a bid to improve efficiency in health care, the Ministry of Health (MoH) in Malaysia has been implementing various health sector reforms such as expansion and upgrading of public health facilities. Even though efficiency study is vital for health care institution in monitoring performance, to date no study has been undertaken to measure technical and scale efficiencies of public hospitals in Kedah specifically. The objectives of this study are to measure technical and scale efficiencies among district public hospitals in the state of Kedah, Malaysia. Data envelopment analysis (DEA) technique was used in estimating the efficiency score of these hospitals. Data were obtained from nine public hospitals in Kedah for three years from 2008 to 2010. The DEA technique was used on pooled data which consists of 27 decision-making units (DMUs). The input data comprised the number of doctors, nurses and beds while the number of outpatients, inpatients, surgeries and deliveries performed represented the outputs. Of 27 DMUs, 74 per cent were technically efficient which lied on the best-practice frontier. The technical efficiency (TE) score of technical-inefficient hospitals ranged between 0.780 and 0.991 with the average of 0.935 while the score of scale-inefficient hospitals was between 0.832 and 0.992. The average score of 16 scale-inefficient DMUs was 0.938 which implies that, on average, these DMUs were able to reduce 6.25 per cent of their resources while maintaining the same number of output.