An examination of competition and efficiency for hospital industry in Turkey

The two particular reforms that have been undertaken under the Health Transformation Program in Turkey are enhancing efficiency and increasing competition. However, there is a lack of information about the relationship between competition and hospital efficiency. The purpose of this paper is to analyze the effect of competition on technical efficiency for the hospital industry in Turkey. The target population included all public and private general hospitals that were open in 2010 in Turkey (n = 1,224). From these, 1,103 hospitals met the selection criteria and were included in the study. Data were obtained from the Turkish Statistical Institute, the Ministry of Health, and through a field survey. Technical efficiency of hospitals was estimated using Data Envelopment Analysis with five outputs and five inputs. The intensity of competition among hospitals was measured by objective and subjective measures. Objective competition was measured using the Hirschman-Herfindahl Index, and subjective competition was measured based on the perceptions of top level hospital managers. Multivariate Tobit regression was used to investigate the relationship between competition and efficiency while controlling the effects of demand and supply characteristics of the market and the hospital traits. Efficiency results showed that 17 % of hospitals were technically efficient. Regression analyses portrayed that the degree of competition among general hospitals did not have a statistically significant relationship with hospitals’ technical efficiency. To conclude, hospital efficiency in Turkey does not seem to be affected by the intensity of competition among hospitals.