Technical Efficiency, Productivity, and Determinants of Technical Inefficiency of Local Hospitals in Oman: Using Data Envelopment Analysis
Abstract
The purpose of this study is to evaluate the technical efficiency, productivity, and determinants of technical inefficiency in local hospitals in Oman, which are facing increasing resource constraints. Effective utilization of hospital resources is crucial for improving service delivery, ensuring equitable access, and maintaining the quality of healthcare. The study employs an input-oriented Data Envelopment Analysis (DEA) approach to assess the technical efficiency of 29 local hospitals under constant returns to scale (CRS), variable returns to scale (VRS), and scale efficiency (SE) using data from 2018. Additionally, a Tobit regression model is used to identify the determinants of hospital inefficiency, and the DEA-based Malmquist Productivity Index (MPI) is applied to panel data from 2015 to 2018 to measure Total Factor Productivity Change (TFPCH). The findings reveal that 75.8% of the local hospitals were technically efficient under VRS and SE assumptions, while 79.3% achieved technical efficiency under the CRS assumption. The average technical efficiency scores under CRS, VRS, and SE were 96%, 97%, and 99%, respectively. The Tobit model indicates that the number of physicians and pharmacists negatively impacts the VRS efficiency score, while the number of outpatient visits has a positive effect. Productivity growth of 18.1% was observed over the study period, mainly driven by a 42.6% increase in technological change. The study concludes that while most local hospitals in Oman are technically efficient, there is still room for improvement. The findings imply that targeted interventions, such as optimizing the allocation of human resources and leveraging technological advancements, could enhance the overall efficiency and productivity of the healthcare system in Oman.
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