Evaluation Of Croatia’S Regional Hospital Efficiency: An Application Of Data Envelopment Analysis

Due to expenditure increases that can be attributed to several reasons, healthcare systems throughout the world strive towards cost containment. In order to conduct it in a satisfactory manner, it is necessary fi rst to determine the sources of inefficiency in the process of providing healthcare services. In this paper regional healthcare effi ciency of Croatian counties is measured based on hospital performance in three-year period (2007-2009) using Data Envelopment Analysis (DEA). Th eset of inputs and outputs consists of six indicators. Four of them are directly related to the healthcare effi ciency, while two are external/uncontrollable factors included in order to take into account great regional socio-economic disparities. Analysis is carried out using models with assumption of variable returns-to-scale (BCC). Since the hospitals have little control over their outputs and more opportunities to reduce inputs used to produce them, inputoriented models are used. In terms of providing hospital healthcare services, DEA identifi eseffi cient counties as examples of good operating practices (benchmark members) and inefficient counties that are analyzed in detail to determine not only the sources but also the amounts of their inefficiency in each source. To enable proper monitoring of efficiency dynamics and make conclusions on behaviour of the county (whether its efficiency has improved, deteriorated or stagnated), window analysis is applied. Based on the results, guidelines for implementing necessary improvements to achieve efficiency are given. Analysis reveals great disparities among counties.