Total factor productivity growth of hospitals in Ireland: a nonparametric approach

Abstract

This article analyses the development of productivity growth and efficiency in the production of hospital care in Ireland from 1995 to 1998. Using output measures of treated cases adjusted for casemix, we apply Malmquist Productivity Indices to analyse changes in efficiency over time. This approach provides information on the types of hospitals that have increased or decreased efficiency during each time frame and the type of inefficiency involved – pure technical, scale or technological. Our results show that on average between 1995 and 1998, both technological and efficiency changes contribute to higher levels of productivity in larger hospitals, but lead to lower levels of productivity in smaller hospitals. However, the contribution of these components of productivity varies over time and technological improvements play a more important role in increasing the productivity of larger hospitals.

Acknowledgements

This research forms part of the research programme ‘The Provision and Use of Health Services, Health Inequalities and Health and Social Gain’, funded by the Health Research Board. I am grateful to the Hospital Inpatient Enquiry system (HIPE) for data on Diagnostic Related Groups.

Notes

¹ This is the second article in a programme of research on hospital efficiency in Ireland – the previous article (see Gannon, 2005) focused on average technical efficiency between 1995 and 2000, using DEA and Stochastic Frontier Analysis.