Title: Technical Efficiencies in Large Hospitals: A Managerial Perspective
Abstract: Taiwan started its National Health Insurance Program (NHIP) on March 1, 1995. NHIP subsidizes each hospital visit, reducing the transaction cost for a patient to go to a large hospital. It has thus become an Important issue to improve the efficiency of large hospitals in Taiwan. We use the latest 2001 official cross-section data set and select 80 hospitals with more than 250 beds for analysis. This research applies the data envelopment approach (DEA) to compute hospital efficiencies, and then uses both the Mann-Whitney test and Tobit (censored) regression to find the effects of environmental variables on these efficiency scores. It is found that public ownership significantly worsens a hospital's efficiency, while higher ward capacity utilization helps improve a hospital's efficiency. Increasing the number of expensive equipment and beds also significantly improves a hospital's efficiency. I. Introduction The World Health Organization reports that the problems of efficiency and quality of health care services still remain as the major issues presently under limited resources in the production and provision of health care. In Taiwan the industrialization of the economy, urbanization, and the aging of the population have all brought about changes in disease patterns. In addition, the rapid growth in international trade, the development of tourism, the growth in the number of foreign labor, the increasing threat of imported infectious diseases, and continuous technology investments have posed new challenges to public health programs and hospital operations. After seven years of planning, the National Health Insurance Program (NHEP) finally came into effect on March 1, 1995. As a major step in the past half century of Taiwan's medical care systems, it is also a milestone for the social welfare policies of Taiwan. The implementation of NHIP immediately increased demand for medical services and thus raised medical expenses. Based on functional complexity, Taiwan hospitals are categorized into medical centers and regional hospitals (highest level), district hospitals (medium and small level), and primary clinics (basic level). Medical centers and regional hospitals deal with highprecision medical operations, teaching, training, research, etc. Under the composition of hospital beds by accreditation, in Taiwan there are at least 500 beds in a medical center, at least 250 beds in a regional hospital, and at least 20 beds in a district hospital. Large hospitals, including medical centers and regional hospitals, have more financial resources to afford the most advanced and complicated medical equipment. The implementation of NHIP has reduced the marginal cost for patients to visit a large hospital, resulting in an increase in the willingness for people to go to a large hospital. Consequently, these two kinds of hospitals received 48.94% of NHIP's total approved medical benefit payments in 2001. Therefore, the efficiency of medical centers and regional hospitals is a crucial issue for people's health care in Taiwan. These two kinds of hospitals have similar levels of medical operations and thus can be incorporated into one DEA study. Data envelopment analysis (DEA) has been used by several researchers to study hospital performance (Sherman, 1984; Grosskopf and Valdmanis, 1987; Sahin and Ozcan, 2000). Due to the implementation of the National Health Insurance Program, the medical fees are regulated and paid by a third party, making medial prices distorted. As a result, current official prices no longer reflect the demand and supply in Taiwan's medical market. This research thus focuses on technical efficiency analysis. A public institute financially relies usually on a government budget and lacks any profit incentive. The bureaucratic characteristic brings a public institute to X-inefficiency, making a public institute less efficient than a private institute (Niskanen, 1971). Meanwhile, a public hospital's efficiency may be improved by a rigorous government input control. …
Publication Year: 2004
Publication Date: 2004-12-01
Language: en
Type: article
Access and Citation
Cited By Count: 45
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot