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Efficiency and productivity change in Taiwan’s hospitals: a non-radial quality-adjusted measurement

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  • Chia-Hsuan Wu
  • Ching-Cheng Chang
  • Po-Chi Chen
  • Ken-Nan Kuo

Abstract

This study measures the quality-adjusted hospital efficiency and productivity index of a production unit. We propose a non-radial output-oriented directional distance function approach to analyze Taiwan’s hospital productivity, which embeds the quality of care and environment variables simultaneously. There are two major advantages of this model. First, it considers all the radial and non-radial slacks that the model can identify, and hence is able to provide a more accurate performance measure and improve the discriminating power of the analysis. Second, it allows us to identify the source of the inefficiency. Our results show that the productivity indices of most of Taiwan’s hospitals got worse during the 2002–2004 period, during which both technology and efficiency performance deteriorated, but divergence appeared among different types of hospitals. We confirmed the need to incorporate quality factors while measuring a hospital’s efficiency and productivity. Nevertheless, there is no evidence to support the idea that healthcare quality is undermined by the cost-saving efforts by the care providers after the implantation of a global budget system. Copyright Springer-Verlag 2013

Suggested Citation

  • Chia-Hsuan Wu & Ching-Cheng Chang & Po-Chi Chen & Ken-Nan Kuo, 2013. "Efficiency and productivity change in Taiwan’s hospitals: a non-radial quality-adjusted measurement," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 21(2), pages 431-453, March.
    • Handle: RePEc:spr:cejnor:v:21:y:2013:i:2:p:431-453
    DOI: 10.1007/s10100-012-0238-7
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    Cited by:

    1. Sebastian Kohl & Jan Schoenfelder & Andreas Fügener & Jens O. Brunner, 2019. "The use of Data Envelopment Analysis (DEA) in healthcare with a focus on hospitals," Health Care Management Science, Springer, vol. 22(2), pages 245-286, June.
    2. Rita Matos & Diogo Ferreira & Maria Isabel Pedro, 2021. "Economic Analysis of Portuguese Public Hospitals Through the Construction of Quality, Efficiency, Access, and Financial Related Composite Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 157(1), pages 361-392, August.
    3. Ferreira, D.C. & Marques, R.C., 2019. "Do quality and access to hospital services impact on their technical efficiency?," Omega, Elsevier, vol. 86(C), pages 218-236.
    4. Margaréta Halická & Mária Trnovská, 2018. "Negative features of hyperbolic and directional distance models for technologies with undesirable outputs," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 26(4), pages 887-907, December.
    5. Yauheniya Varabyova & Carl Rudolf Blankart & Jonas Schreyögg, 2017. "Using nonparametric conditional approach to integrate quality into efficiency analysis: empirical evidence from cardiology departments," Health Care Management Science, Springer, vol. 20(4), pages 565-576, December.
    6. Yauheniya Varabyova & Jonas Schreyögg, 2018. "Integrating quality into the nonparametric analysis of efficiency: a simulation comparison of popular methods," Annals of Operations Research, Springer, vol. 261(1), pages 365-392, February.
    7. Margit Sommersguter-Reichmann, 2022. "Health care quality in nonparametric efficiency studies: a review," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(1), pages 67-131, March.
    8. Ferreira, D.C. & Marques, R.C., 2021. "Public-private partnerships in health care services: Do they outperform public hospitals regarding quality and access? Evidence from Portugal," Socio-Economic Planning Sciences, Elsevier, vol. 73(C).
    9. Rajasulochana, Subramania Raju & Chen, Po-Chi, 2019. "Efficiency and Productivity changes in the presence of undesirable outcomes in Emergency Obstetric and Newborn Care," Journal of Policy Modeling, Elsevier, vol. 41(5), pages 905-925.
    10. Hung-pin Lai & Meng-Chi Tang, 2018. "Hospital efficiency under global budgeting: evidence from Taiwan," Empirical Economics, Springer, vol. 55(3), pages 937-963, November.
    11. Sommersguter-Reichmann, Margit & Stepan, Adolf, 2015. "The interplay between regulation and efficiency: Evidence from the Austrian hospital inpatient sector," Socio-Economic Planning Sciences, Elsevier, vol. 52(C), pages 10-21.

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    More about this item

    Keywords

    Data envelopment analysis; Directional distance function; Russell measure; Slacks-based measures; Malmquist-Luenberger index; Hospitals; C5; I12;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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