Examining the Efficiency of Selected Private Hospitals in Southern Philippines using Data Envelopment Analysis

Objectives: This study aims to evaluate the relative efficiency of selected private hospitals in Southern Philippines using the output-oriented CCR model of data envelopment analysis (DEA). Methods: The output-oriented CCR model of the DEA is applied to analyze efficiency of selected private hospitals in the Philippines using four inputs (namely, doctors, nurses, other staffs and beds) and four outputs (namely, minor operations, major operations, cases treated and patient days) as parameters. Findings: DEA is a management tool commonly used to evaluate the efficiency of service units referred to as the decision-making units (DMUs) working under similar conditions and using the same types of inputs to produce the same kind of output. Unlike typical statistical approaches which compare productivity of a unit with respect to the average, DEA compares each unit with the best units and are classified as either efficient or less efficient. Moreover, the less efficient DMUs need to adopt its efficiency reference set (ERS) or benchmarks for it to improve and become efficient. Results of the study show that 1 out of 10 private hospitals are found to be less efficient using CCR model. Results further provide the magnitude of efficiency of each DMU and also reveal the potential improvements for the private hospital identified as less efficient using the model, on the basis of quantifying the efficiency. Application: This study can provide a way for the hospitals to better enhance their efficiency.