Efficiency analysis in public hospital with bayesyen stochastic frontier analysis

The concept of efficiency is of particular importance for health services, which is an expensive type of service. Within the framework of contemporary "social state" understanding, health services constitute a considerable share within total government spendings. Therefore, the increase in the level of efficiency will enable the state to make better resource planning and to provide justice in health services more easily by reducing the cost of health services. Performance measurement and monitoring are particularly important issues in health care services. One of the most important aspects of the performance goals of a health system is efficiency. In the few decades, many parametric and non-parametric methods have been developed to be used in the performance evaluation of health services. The two main methods used for empirical measurement of efficiency are Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA). Because Bayesian SFA takes a priori information into consideration, it provides more realistic estimates. An (in)efficiency problem in the health sector in Turkey has been documented by observations and empirical studies conducted so far. In this study, technical efficiency in health services was investigated at the level of each public hospitals and it was investigated by using classical SFA and Bayesian SFA methods. The results show that the efficiency scores obtained from classical and Bayesian SFA differ significantly. According to the Bayesian efficiency scores, public hospitals operate close to the full efficiency limit and therefore have limited potential to increase efficiency. Keywords: Efficiency, hospital, stochastic frontier analysis, Bayesian stochastic frontier analysis