Technical efficiency of public hospitals in Khuzestan province, Iran

Introduction: The hospital sector in developing countries is a large consumer of scarce health care resources. Hospitals in, like other developing countries, are consuming about 80 percent of the public sector expenditures (about 37 percent of the total health expenditures) on health. Even though efficiency is accorded a central place in the health policies of Iran, in practice much remain to be done .The lack of literature on hospital efficiency studies in Iran may, perhaps, indicate that in practice not much attention is given to efficiency by health care administrators. The objectives of this study, based on data collected in 2004, were: to estimate the relative technical efficiency (TE), managerial and scale efficiency (SE) of all public hospitals in Khuzestan province.

Method and materials: The Data Envelopment Analysis (DEA) approach was used to estimate the efficiency of 19 public hospitals. This was an exploratory study.

Results: The results indicated that average of technical, managerial and scale efficiency in the hospitals respectively were 0/914, 0/943 and 0/968. The technical efficiency results showed that nine(47%) hospitals were fully efficient (efficiently=1), three(16%) hospitals are between -1 and 0/9, six (32%)  hospitals were between 0/7 and 0/9, and one(5%) hospital had technical efficiency less than 0/7. Also, Results related to Economies of Scale showed that nine (47%) hospitals had fixed return to scale; five (26%) hospitals increasing and five (26%) decreasing returns to scale.

Conclusion: According to the findings of the study, if the hospitals reduced %8.5 input uses, with the same level of outputs, they could operate efficiently. It seems that hospitals can reduce utilization of inputs significantly, through performance improvements and increasing efficiency, and as a result they can reduce their costs and recourse wastes.

Keywords: Technical Efficiency, Pure Technical Efficiency, Scale Efficiency, Data Envelopment Analysis, Return to Scale.