The Health Sector Evolution Plan and the Technical Efficiency of Public Hospitals in Iran

BACKGROUND: Iranian public hospitals have been excessively changing during the healthcare reform since 2014. This study aimed to examine the technical efficiency of public hospitals during before and after the implementation of Health Sector Evolution Plan (HSEP) and to determine whether, and how, efficiency is affected by various factors. METHODS: Forty-two public hospitals were selected in Tehran, Iran, from 2012 to 2016. Data envelopment analysis was employed to estimate the technical and scale efficiency sample hospitals. Tobit regression was used to relate the technical efficiency scores to seven explanatory variables in 2016, the last year. RESULTS: Overall, 24 (57.1%), 26 (61.9%), 26 (61.9%), 24 (57.1%) and 21 (50%) of the 42 sample hospitals ran inefficiently in 2012 to 2016, with average technical efficiency of 0.859, 0.836, 0.845, 0.905 and 0.934, respectively. The average pure technical efficiency in sample hospitals increased from 0.860 in 2010 (before the HSEP) to 0.944 in 2012 (after the HSEP). Tobit regression showed that average length of stay had a negative impact on technical efficiency of hospitals. In addition, bed occupancy rate, ratio of beds to nurses and ratio of nurses to physicians assumed a positive sign with technical efficiency. CONCLUSION: Despite government support, public hospitals operated relatively inefficien. Managers can enhance technical efficiency by increasing bed occupancy rate through shortening the average length of stay, proportioning the number of doctors, nurses, and beds along with service quality assurance.