Measuring the efficiency of Palestinian public hospitals during 2010-2015: an application of a two-stage DEA method

Background: While health needs and expenditure in the Occupied Palestinian Territories (OPT) are growing, the international donations are declining and the economic situation is worsening. The purpose of this paper is twofold, to evaluate the productive efficiency of public hospitals in West Bank and to study contextual factors contributing to efficiency differences. Methods: This study examined technical efficiency among 11 public hospitals in West Bank from 2010 through 2015 targeting a total of 66 observations. Nationally representative data were extracted from the official annual health reports. We applied input-oriented Data Envelopment Analysis (DEA) models to estimate efficiency scores. To elaborate further on performance, we used Tobit regression to identify contextual factors whose impact on inefficient performance is statistically significant. Results: Despite the increase in efficiency mean scores by 4% from 2010 to 2015, findings show potential savings of 14.5% of resource consumption without reducing the volume of the provided services. The significant Tobit model showed four predictors explaining the inefficient performance of a hospital (p < 0.01) are: bed occupancy rate (BOR); the outpatient-inpatient ratio (OPIPR); hospital's size (SIZE); and the availability of primary healthcare centers within the hospital's catchment area (PRC). There is a strong effect of OPIPR on efficiency differences between hospitals: A one unit increase in OPIPR will lead a decrease of 19.7% in the predicted inefficiency level holding all other factors constant. Conclusion: To date, no previous studies have examined the efficiency of public hospitals in the OPT. Our work identified their efficiency levels for potential improvements and the determinants of efficient performance. Based on the measurement of efficiency, the generated information may guide hospitals' managers, policymakers, and international donors improving the performance of the main national healthcare provider. The scope of this study is limited to public hospitals in West Bank. For a better understanding of the Palestinian market, further research on private hospitals and hospitals in Gaza Strip will be useful.