Tradeoff between efficiency and perceived quality: evidence from patient-level data.

Abstract

To estimate technical efficiency scores of District Headquarter Hospitals (DHQHs) for obstetric services and to explore the relationship between the efficiency of DHQHs and the patients' satisfaction about the quality of services provided. Data from Health Facility Assessment (HFA) survey is used for efficiency measurement. The data on patient's perceptions and other control variables are taken from Client Exit Interviews part of the HFA survey. Two-stage residual inclusion, Ordered Logistic Regression and Least square dummy variable techniques are used to investigate the relationship between technical efficiency and patients' satisfaction level. The average efficiency score for Pakistan's DHQHs is 0.52, and not a single hospital is fully efficient. Moreover, the relationship between technical efficiency and patients' satisfaction is found to be negative and statistically significant indicating that an increase in hospital efficiency tends to decrease patients' satisfaction. The disaggregated analysis reveals that patients' satisfaction associated with the healthcare provider attitude and communication is more affected by technical efficiency. Patients' satisfaction level is more sensitive to physician's attitude and communication. This makes sense because the longer the consultation time, the more accurate the diagnosis would be. This, together with a comforting and confident physician, is likely to achieve better patients' satisfaction.