Evaluating the Productivity of Faith based Hospitals in Tanzania: Application of Malmquist Productivity Index (MPI) Approach

In this study we estimate the productivity of Not For Profit (NFP) hospitals in Tanzania over sampled period from 2001/2002- 2011/2012, of which most of them belongs to faith based orgarnisations. Faith based orgarnisations in Tanzania are categorized into Volunteering Agency Hospitals (VAHs) and Councils Designated Hospitals (CDHs) our focus in this paper premised on Volunteering Agency Hospitals (VAHs). We employ a DEA based Malmquist Productivity Index (MPI) in the data set of 15 faith based hospitals. Objective of this study is to determine the total factor productivity (TFP) and its components over the period under the study as well as establishing the sources of productivity change. Contribution of our study stems in the following ways: firstly, examine the productivity change of the hospitals under the study and hence be able to provide generalization about the productivity of faith based hospitals in Tanzania (particularly volunteering agency hospitals), this will give hospitals’ administrators, owners and policy makers a clear picture with regards to productivity performance. Secondly, the study will contribute to the existing literatures on hospital productivity (particularly faith based hospitals in developing countries such as Tanzania). The results of our study revealed that the Volunteering Agency Hospitals (VAH) in Tanzania experienced 1.6 per cent deterioration rate per year during the period under the study (2001/2002 – 2011/2012). This deterioration of 1.6 per cent per year is largely due to a decline (worsening) in technical progress (2.6 per cent per year) which counterbalanced the improvement in technical efficiency change which is very small (1 per cent per year).