Technical efficiency and productivity of Chinese county hospitals: an exploratory study in Henan province, China

OBJECTIVES: Chinese county hospitals have been excessively enlarging their scale during the healthcare reform since 2009. The purpose of this paper is to examine the technical efficiency and productivity of county hospitals during the reform process, and to determine whether, and how, efficiency is affected by various factors. SETTING AND PARTICIPANTS: 114 sample county hospitals were selected from Henan province, China, from 2010 to 2012. OUTCOME MEASURES: Data envelopment analysis was employed to estimate the technical and scale efficiency of sample hospitals. The Malmquist index was used to calculate productivity changes over time. Tobit regression was used to regress against 4 environmental factors and 5 institutional factors that affected the technical efficiency. RESULTS: (1) 112 (98.2%), 112 (98.2%) and 104 (91.2%) of the 114 sample hospitals ran inefficiently in 2010, 2011 and 2012, with average technical efficiency of 0.697, 0.748 and 0.790, respectively. (2) On average, during 2010–2012, productivity of sample county hospitals increased by 7.8%, which was produced by the progress in technical efficiency changes and technological changes of 0.9% and 6.8%, respectively. (3) Tobit regression analysis indicated that government subsidy, hospital size with above 618 beds and average length of stay assumed a negative sign with technical efficiency; bed occupancy rate, ratio of beds to nurses and ratio of nurses to physicians assumed a positive sign with technical efficiency. CONCLUSIONS: There was considerable space for technical efficiency improvement in Henan county hospitals. During 2010–2012, sample hospitals experienced productivity progress; however, the adverse change in pure technical efficiency should be emphasised. Moreover, according to the Tobit results, policy interventions that strictly supervise hospital bed scale, shorten the average length of stay and coordinate the proportion among physicians, nurses and beds, would benefit hospital efficiency.