This paper seeks to measure and evaluate the productive efficiency of health‐care organizations (hospitals) using a multicriteria Data Envelopment Analysis (DEA) methodology. DEA is a special linear programming model for deriving the comparative efficiency of multiple‐input multiple‐output Decision‐Making Units (DMUs). DEA provides management with information regarding the relatively best practice hospitals in the observation set and locates the relatively inefficient hospitals by comparison with the best practice ones. In addition, it indicates the magnitude of these inefficiencies. The paper selects a set of inputs and outputs for 15 hospitals for a three‐year period. The hospital input measures included are: number of bed days, number of physicians, and number of health personnel. The output measures included are: number of patient days, number of minor operations, and number of major operations. The DEA models are solved using an IBM PC optimization modeling system called LINDO (linear, interactive, discrete optimizer).
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