Determinants of hospital efficiency: The case of central government-owned hospitals in Taiwan

This paper combines data envelopment analysis (DEA) with regression analysis to evaluate the efficiency of central government-owned hospitals in Taiwan over the five fiscal years between 1990 and 1994. Efficiency is first estimated using DEA with the choice of inputs and outputs being specific to hospital operations. A multiple regression model is then employed in which the efficiency score obtained from the DEA computations is used as the dependent variable, and a number of hospital operating characteristics are chosen as the independent variables. The results indicate that the scope of services and proportion of retired veteran patients are negatively and significantly associated with efficiency, whereas occupancy is positively and significantly associated with efficiency. Furthermore, the results also show that hospital efficiency has improved over time during the periods studied and, given the contemporary focus on concerns regarding efficiency in health care, the results provide an indication that inter-temporal efficiency gains are attainable in the health-care sector in anticipation of the implementation of the National Health Insurance Programme.