Technical efficiency in the delivery of health care services: : a case study of public hospitals in Kenya

Abstract

This study evaluates the technical efficiency and productivity of a sample of public hospitals in Kenya using the non-parametric techniques of data envelopment analysis(DEA) and a DEA based Malmquist Productivity Index (MPI). A logit regression is also estimated to determine factors responsible for technical efficiency in health care institutions. The sample consisted of 63 public hospitals.

The number of doctors,pharmacists, number of clinical officers, number of nurses, expenditure used on maintenance and expenditure used on drugs were used as inputs in the study. Outputs included inpatient days and outpatient visits. The findings indicate that 30% of hospitals operate efficiently as compared to their peers.

To achieve technical efficiency among the inefficient hospitals there is need reduce inputs by 46 nurses, doctors by 160, and clinical officers by 48, reduce expenditure on drugs by Kshs. 31,465.23, reduce expenditure on maintenance by Kshs. 5million and increase outpatient visits by 113,998. The amount saved from the expenditure used in maintenance and on drugs could be used to upgrade service quality where necessary in the hospitals.

DEA efficiency scores were used to run the logit regression model. Results show that clinical officers, expenditure on drugs and inpatient visits are the only variables that influence efficiency. These three variables have a significant negative influence on efficiency. Thus increasing any of these variables by one is likely to promote inefficiency.

The MPI showed that, long-term average annual productivity was negative for 39 hospitals out of the 63 public hospitals studied. These hospitals experienced annual loss in efficiency. Only 24 hospitals exhibited average annual gains in efficiency. Thirty-two hospitals experienced annual technical regress while 31 hospitals experienced annual technical progress. These results show that the ministry of health has potential to improve quality of care and increase access to health care to people in Kenya especially those in the rural areas where majority of the population leave and are poor without injecting additional resources to the health sector. For the government to address the issue of inequity, there is need to address the issue of inefficiency levels.