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Determinants of Technical Efficiency in Public Hospitals: The Case of Saudi Arabia


  • Ahmed D. Alatawi

    (Liverpool School of Tropical Medicine, LSTM
    University of Al-Jouf)

  • Louis W. Niessen

    (Liverpool School of Tropical Medicine
    University of Warwick)

  • Jahangir A. M. Khan

    (Liverpool School of Tropical Medicine
    Karolinska Institute)


Objective In this study, we investigate the effect of the external environmental and institutional factors on the efficiency and the performance of the public hospitals affiliated to the Ministry of Health (MOH) in the Kingdom of Saudi Arabia (KSA). We estimate the demographic and socioeconomic characteristics of catchment populations that explain the demand for health services. Methods We apply descriptive analysis to explore what external factors (demographic and socioeconomic factors) can explain the observed differences in technical efficiency scores. We use Spearman’s rank correlation, multivariate Tobit regression and Two-part model to measure the impact of the explanatory variables (i.e. population density, nationality, gender, age groups, economic status, health status, medical interventions and geographic location) on the efficiency scores. Results The analysis shows that the external factors had a significant influence on efficiency scores. We find significant associations between hospitals efficiency scores and number of populations in the catchment area, percentage of children (0–5 years old), the prevalence of infectious diseases, and the number of prescriptions dispensed from hospital’s departments. Also, the scores significantly associate with the number of populations who faced financial hardships during medical treatments, and those received financial support from social administration. That indicates the hospitals that serve more patients in previous characteristics are relatively more technically efficient. Conclusions The environmental and institutional factors have a crucial effect on efficiency and performance in public hospitals. In these regards, we suggested improvement of health policies and planning in respect to hospital efficiency and resource allocation, which consider the different demographic, socioeconomic and health status of the catchment populations (e.g., population density, poverty, health indicators and services utilization). The MOH should pay more attention to ensure appropriate allocation mechanisms of health resources and improve utilization of health services among the target populations, for securing efficient and equitable health services.

Suggested Citation

  • Ahmed D. Alatawi & Louis W. Niessen & Jahangir A. M. Khan, 2020. "Determinants of Technical Efficiency in Public Hospitals: The Case of Saudi Arabia," Health Economics Review, Springer, vol. 10(1), pages 1-11, December.
  • Handle: RePEc:spr:hecrev:v:10:y:2020:i:1:d:10.1186_s13561-020-00282-z
    DOI: 10.1186/s13561-020-00282-z

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    References listed on IDEAS

    1. Bruce Hollingsworth, 2008. "The measurement of efficiency and productivity of health care delivery," Health Economics, John Wiley & Sons, Ltd., vol. 17(10), pages 1107-1128, October.
    2. Owen O'Donnell & Eddy van Doorslaer & Adam Wagstaff & Magnus Lindelow, 2008. "Analyzing Health Equity Using Household Survey Data : A Guide to Techniques and Their Implementation," World Bank Publications, The World Bank, number 6896, September.
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    4. Firdaus Hafidz & Tim Ensor & Sandy Tubeuf, 2018. "Assessing health facility performance in Indonesia using the Pabón‐Lasso model and unit cost analysis of health services," International Journal of Health Planning and Management, Wiley Blackwell, vol. 33(2), pages 541-556, April.
    5. Matthew Sutton & Peter Lock, 2000. "Regional differences in health care delivery: implications for a national resource allocation formula," Health Economics, John Wiley & Sons, Ltd., vol. 9(6), pages 547-559, September.
    6. Alvarez, Roberto & Crespi, Gustavo, 2003. "Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-244, May.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Angela Devine’s journal round-up for 28th September 2020
      by Angela Devine in The Academic Health Economists' Blog on 2020-09-28 11:00:07

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