Adding value in healthcare service by improving operational efficiency using Data Envelopment Analysis

Abstract

Data Envelopment Analysis (DEA) has been used in several studies in healthcare service. There, the authors primarily utilised the traditional Charnes-Cooper-Rhodes (CCR) and Banker-Charnes-Cooper (BCC) models to measure relative efficiency of decision-making units, and their main focus was on efficient units. In this paper, using the CCR model with Intrinsic Assurance Region (IAR), we focus on how to conserve resources and eliminate wastes by projecting inefficient units on to the efficient frontier. By analysing a set of data from hospitals that operate in a non-market non-profit environment, we demonstrate how to add value in healthcare service by improving technical efficiency of inefficient hospitals.

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