Health Systems and Policy Research

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Productivity and Efficiency Changes in Referral Hospitals in Uganda: An Application of Malmquist Total Productivity Index

Mujasi PN and Kirigia JM

Background: Strengthening health institutions increases the productivity of health spending. Institutions like hospitals which use a large proportion of the health budget are natural targets for productivity improvements, which need to be tracked over time to enable corrective action. This paper measure changes in technical and scale efficiency of hospitals in Uganda, and evaluates changes in productivity over a five year period in order to analyze changes in efficiency and technology. Methods and findings: This was a longitudinal study using five year panel secondary data. Input and output data were obtained from the Uganda Ministry of Health annual health sector performance reports for five financial years (2009/10 to 2013/14) for the 13 public sector regional referral hospitals. We use Data Envelopment Analysis to estimate efficiency of the hospitals in each financial year; and Malmquist Total Factor Productivity Index (MPI) to calculate changes in productivity using STATA 13. Productivity of the hospitals in our sample grew over the five year period, with significant growth between FY 11/12-12/13 and FY 12/13-13/14 (P<0.01). The observed average MPI score was 1.049 indicating that the hospitals on average increased their productivity by about 5% between each considered period. Growth in productivity was mainly due to technological progress rather than efficiency improvement. Changes in efficiency across all the time periods were not significant (P>0.01). Over the five year period, to become efficient, the inefficient hospitals would need to increase the outpatient department visits by a total of 2,802,318 visits (19%), deliveries by 36,383 (6%) and inpatient days by 1,163,652 (10%) without increasing any of the inputs. Conclusions: The study highlights missed opportunities in providing more hospital services to additional persons by using the existing health system inputs more efficiently. There is scope for further improving hospital productivity in Uganda by focusing on improving hospital efficiency. Keywords: Data envelopment analysis; Efficiency change; Hospital efficiency; Malmquist productivity index; Productivity; Technological change; Uganda Abbreviations: AHSPR: Annual Health Sector Performance Reports; CRS: Constant Returns to Scale; DEA: Data Envelopment Analysis; DMU: Decision Making Unit; DRS: Decreasing Returns to Scale; EFFCH: Efficiency Change; FY: Financial Year; HSSIP: Health Sector Strategy and Investment plan; IRS: Increasing Returns to Scale; MOH: Ministry of Health; MPI: Malmquist Total Factor Productivity Index (MPI); NGOs: Non-Governmental Organization; OPD: Out Patient Department; PNFP: Private Not For Profit; SECH: Scale efficiency change; TECH: Technical Efficiency Change; VRS: Variable Returns to Scale