Economic analysis of the efficiency of hospitals

Abstract

The article presents the basics of economic analysis of the efficiency of
hospitals. In the first part, the concept of efficiency is defined on the basis
of Pareto’s legacy. Because efficiency can be measured in several ways, the
article presents the approach to the economic efficiency of production, which
is the product of technical and allocative efficiency, from the perspective
of costs, revenues and profits. The second section describes the two main
methods for estimating efficiency, namely the method of DEA drawn from
linear programming and the econometric method of the SFA representing
stochastic and parametric approach. Attention is focused on the problems
of determining the efficiency of hospitals and the healthcare system in the
following four points. The first issue is whether hospitals achieve economic
efficiency understood as a product of technical and allocative efficiency.
The second issue, although connected with allocative efficiency, is treated
as a separate one because of its significance. It concerns checking whether
hospitals are overcapitalized. The third issue refers to the impact of the costs
incurred by hospitals on the degree of their specialization. The last issue
concerns the impact of the number of hospitals on costs incurred by hospitals
and the healthcare system.