STOCHASTIC FRONTIER ANALYSIS OF HOSPITAL EFFICIENCY: DOES THE MODEL SPECIFICATION MATTER?

Year 2016, Volume: 5 Issue: 1, 17 - 26, 30.03.2016

Emre Atilgan

https://doi.org/10.17261/Pressacademia.2016116550

Abstract

In this study, the technical efficiency of outpatient
service production of hospitals is analyzed by using the Stochastic Frontier
Analysis (SFA) with different model specifications. The purpose of the study is
to present the effects of different SFA model specifications on the
distribution of efficiency score and/or production function parameter
estimates. In the analysis, the data of 429 Turkish MoH hospitals for the years
2012, 2013 and 2014 is used. The results of this paper suggest that different
SFA specification, i.e. using Cobb-Douglas or Translog production technology
and/or using an error component model or technical efficiency effects model,
shifts the production function parameter estimates and the mean efficiency
scores. On the other hand, the efficiency scores estimated by different model
specifications are found to be highly correlated both in magnitude and rank
order. 

Keywords

Stochastic Frontier Analysis, Hospital Efficiency, Technical Efficiency, Outpatient Services, Production Function

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