Efficiency effects of public hospital closures in the context of public hospital reform: a multistep efficiency analysis

In the wake of hospital reforms introduced in 2011 in Turkey, public hospitals were grouped into associations with joint management and some shared operational and administrative functions, similar in some ways to hospital trusts in the English National Health Service. Reorganization of public hospitals effect hospital and market area characteristics and existence of hospitals. The objective of this study is to examine the effect of closure on competitive hospital performances. Using administrative data from Turkish Public Hospital Statistical Yearbooks for the years 2005 to 2007 and 2014 to 2017, we conducted a three-step efficiency analysis by incorporating data envelopment analysis (DEA) and propensity score matching techniques, followed by a difference-in-differences (DiD) regression. First, we used bootstrapped DEA to calculate the efficiency scores of hospitals that were located near hospitals that had been closed. Second, we used nearest neighbour propensity score matching to form control groups and ensure that any differences between these and the intervention groups could be attributed to being near a hospital that had closed rather than differences in hospital and market area characteristics. Lastly, we employed DiD regression analysis to explore whether being near a closed hospital had an impact on the efficiency of the surviving hospitals while considering the effect of the 2011 hospital reform policies. To shed light on a potential time lag between hospital closure and changes in efficiency, we used various periods for comparison. Our results suggest that the efficiency of public hospitals in Turkey increased in hospitals that were located near hospitals that closed in Turkey from 2011. Hospital closure improves the efficiency of competitive hospitals under hospital market reforms. Future studies may wish to examine the efficiency effects of government and private sector collaboration on competition in the hospital market.