Efficiency Indicators Versus Frontier Methods : An Empirical Investigation of Italian Public Hospitals

Efficiency has a key-role in the measurement of the impact of the National Health Service (NHS) reforms. We investigate the issue of inefficiency in health sector and provide empirical evidence derived from Italian public hospitals. Despite the importance of efficiency measurement in health care services, only recently advanced econometric methods have been applied to hospital data. We provide a synoptic survey of few empirical analyses of efficiency measurement in health care services. An estimate of the cost efficiency level in Italian public hospitals of the cost efficiency during 2001-2003 is obtained through a sample. We propose an efficiency indicator and provide cost frontiers for such hospitals, using data envelopment analysis (DEA) and stochastic frontier analysis (SFA). Moreover, we examine the determinants of health care efficiency in a two-stage estimation framework