Efficiency Determinants in Tanzanian Private Hospitals: an Application of Tobit Model.

Abstract

Purpose: Study investigates sources of performance of private hospitals in Tanzania, the study also Investigates direction and level of causality relationship between environmental factors and performance of hospitals. Design/methodology: The study used medical staff and number of beds as inputs while outpatient visits, admissions, post-admission days, outpatients’ surgeries as well as number of births were used as outputs in Data Envelopment Analysis (DEA) to measure efficiency. Data were extracted from hospitals annual report from the year 2002 to 2013. Tobit model was employed to measure factors that determine efficiency, where hospitals efficiency scores were treated as dependent variables while the environmental variables were used as the independent variables Findings: Findings reveled that Public Private Partnerships (PPP) and health insurance have positive causal relationships with hospitals efficiency while the Average length of stay, percentage of emergency room visit and percentage of births were found to have negative causal relationships with hospitals efficiency. In terms of significance of causality, the Percent of emergency, percent of birth, number of beds and occupancy rate were significantly explaining the latent dependent variable of the model, the four variables were also found to have the positive causal relationship with the latent variable of the model.Research limitations/Implications: the study period covers the year 2002-2013 which seems appears not to include recent years, simply because of some missing data (information) in the recent year’s hospital reports. The study also focuses only on the 17 hospitals out of 90 hospitals which are private not for profit hospitals in Tanzania. Hence, the future similar research will focus on the remaining 73 hospitals and try to use the most recent data going beyond the year 2013. Practical implications: knowledge derived from the findings of this study will inform the hospitals administrators, owners on the factors that significantly determines the efficiency of their hospitals in the country. Social implications: contribution from this study will also tell what should be done in terms of review of health sector policy in order to make sure that scarce healthcare resources are efficiently utilized in order to realize Sustainable Development Goals relating to sustainable improvement in economy. Originality/value: the study included environmental as possible factors that may determine performance of hospitals such inclusion of which will inform hospitals administrators how the said significant factors should be handled and policy makers to revisit existing health policies for effective management of health facilities.