SBM-DEA Model Based Efficiency Assessment of Public Sector Hospitals in Uttarakhand, India
Advances in Intelligent Systems and Computing, 2014
The present study is an attempt to provide an overview of the general 6 status of the public sect... more The present study is an attempt to provide an overview of the general 6 status of the public sector hospitals of Uttarakhand, in terms of their productive 7 efficiencies. The paper applies slack base model (SBM) for the measurement of 8 efficiencies and slacks. On the basis of the status of the overall technical efficiency, 9 it concludes that the performance of hospitals is not satisfactory and is far away 10 from the optimal level. The average overall technical efficiency 54.10 % indicates 11 that an average hospital has the scope of producing the outputs with the inputs 12 45.90 % lesser than their existing levels. The slack analysis results show that on 13 average 12.57 % of beds, 13.16 % of doctors, 14.04 % of paramedical staff can be 14 reduced and 17.53 % of out-door patients, 66.55 % of in-door patients, 208.23 % 15 of major surgeries, 110.73 % of minor surgeries can be expanded if all the inef-16 ficient hospitals operate at the level of efficient hospitals.
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Papers by Singh S.p
and total factor productivity (TFP) of 27 government
hospitals of Uttarakhand (India) through data envelopment
analysis based Malmquist Productivity Index for the period
from 2001 to 2011. Technical efficiency change (TECh)
and technical change (TECHCh) for each hospital are also
estimated to identify sources of TFP growth. The results
show that on average, TFP in the hospitals increased by a
rate of 4.9 % per annum, with slightly higher growth
observed in TE (2.6 %) than in technology (2.2 %). The
study also reveals that TFP growth varies across regions
and areas. On average, it has grown slightly faster in
Garhwal region than Kumaon region. Further, it is
observed relatively higher in the hospitals of plain/semi-plain areas than that of hill areas. It is observed that in some hospitals, TECh and TECHCh indices did not move
in the same direction and therefore positive impact of one
component on the TFP growth was largely cancelled by the
negative impact of the other. The paper suggests that TFP
in the public hospitals could be improved by reallocating
the staff from inefficient hospitals to efficient ones;
improving human capital base of inefficient hospitals; and
investing in new medical technology.
Design/methodology/approach– The data are collected from Prowess of Centre for Monitoring of Indian Economy for the financial year 2010-2011. This study uses data envelopment analysis approach, taking raw material, salaries and wages, advertisement and marketing and capital usage cost as input variables and net sales revenue as output variable.
Findings– The paper finds that out of 50 firms, nine firms were overall technical efficient while 19 firms pure technical efficient and thus defined the efficient frontier. The BCC model identified that the inefficiency is either due to inefficient managerial performance or scale utilization. Further, firms
are classified as high, low and middle robust firms on the basis of peer count. The study also analysed the slacks which were found to be significant in regard of some inputs, especially advertisement and marketing. The targets setting results have shown that all the inputs have significant scope
for reduction.
Practical implications– The empirical results are useful in assessing the relative efficiency of the large Indian drug and pharmaceutical industry (ID&P) firms. The managers and owners can take corrective actions to reduce the cost of operations by optimizing advertising and marketing cost,
capital usage cost and salary and wages so as to improve their efficiency.
Originality/value– Unlike the previous studies on the efficiency of the ID&P industry, the paper have shown the significance of improvement in managerial performance and scale utilization. In addition to this, excess inputs used in the production process and also possible target values of inputs and outputs
are shown in the study. The robustness and stability of efficiency scores is also checked.
Keywords: Technical efficiency, Data envelopment analysis, Robustness, Indian pharmaceutical industry, Slack
material, salaries & wages, advertisement & marketing and capital usage cost as input variables and net sales revenue as output variable. The super-efficiency model is applied to rank firms on the basis of efficiency scores. The paper finds that mean overall technical efficiency scores of Private Indian and Private Foreign are higher than Group-owned firms, suggesting that type of ownership affects the performance of a given firm. Further, foreign firms were found to have minimum slacks in inputs, evidently owing to their superior technology, better engineering skills and managerial practices. The study suggests that the inputs, such as,
advertisement & marketing expenditure, and also the usage of labour and capital are required to be utilized far more productively in order to improve efficiency.