DEA-based centralized resource allocation with a balance between efficiency and equity: evidence from healthcare services across 31 provinces in China

In the context of increasing investment in healthcare, the key issue of China's healthcare system reform is how to maximize output and ensure the equity of resource allocation. The generalized DEA-based resource allocation model (Model 1) pursues the maximization of DMU efficiency in resource allocation without considering equity, and it could yield a multi-solution problem by considering only the outputs instead of the inputs in the objective function. Thus, a DEA-based centralized resource allocation model with a balance between efficiency and equity (Model 2) is proposed, in which efficiency and equity are measured by output and input indicators in the objective function simultaneously, this could be more consistent with the essence of the DEA method. Model 2 effectively prevents the multi-solution problem by introducing both outputs and inputs into the objective function, and its Pareto-efficiency is proven. The main advantage of the proposed Model 2 is that efficiency and equity can be optimized in resource allocation; in particular, it can ensure equity for all DMUs in both absolute and relative terms. Furthermore, we illustrate and examine the application of Model 2 with centralized healthcare service resource allocation across 31 provinces in mainland China. We investigate the properties and effectiveness of Model 2 by comparison with Model 1 in terms of both efficiency and equity. Efficiency and equity are measured from three perspectives: efficiency values and slacks, input and output indicators, and allocation deviation. The results prove that Model 2 is superior to Model 1 in terms of both efficiency and equity.