Modeling Efficiency in the Presence of Volunteering Agency Hospitals and Council Designated Hospitals in Tanzania: An Application of non Parametric Approach

Abstract

Health care industry has remained behind other sector in terms of objectives performance evaluation perhaps is more serious in developing countries as compared to their counterpart (developed countries). This study measures and compares efficiency of Council Designated Hospitals (CDHs) and Volunteering Agency Hospitals (VAHs) in Tanzania. The study employs 34 hospitals (17 CDHs and 17 VAHs) in a non-parametric approach, known as Data Envelopment Analysis (DEA) model in the study period that cover 2009 to 2013. The study adopted Mann Whitney U to test the null hypothesis that mean distribution is equal across the CDHs and VAHs. The variables used include inpatients days, outpatients visit, and total surgical operation as the outputs, while the hospitals beds and full time equivalents (FTEs) were adopted as hospitals’ inputs. Findings records that mean variable return to scale (VRTS) technical efficiency for CDHs was 0.744percent, 9 hospitals were found to be technically efficient and 6were experiencing scale efficiency. Most of the hospitals were operating close to the scale efficiency as they have mean scale efficiency of 0.88823 percent. On the other hand, the results shows that VAHs hospitals had mean VRTS technical efficiency of 0.702 percent and 7 hospitals were found to be scale efficient. Since the p-value is less than the 0.05 (5 percent) we rejected the null hypothesis (at 5% level of significance) that Mean distribution of technical efficiency score is equal across the CDHs and VAHs hospitals. The study recommends that hospitals experiencing decreasing return to scale (DRS) or diseconomies of scale their size should be revisited to make them efficient. This is because it seems the hospitals are too small for their activities, and therefore to make the hospitals efficient restructuring is inevitable. On the other hand CDHs and VAHs experiencing economies of scale should be equally supplied with health resources so as to increase their activities hence becomes efficient, such hospitals are too big compared to their level of activities. This study suggests that natural extension of this work should focus on how inefficient CDHs and VAHs could improve their performance given the available scarce resources.