Identifying and studying “best‐performing” services : An application of DEA to long‐term care

Purpose – One of the fastest growing service industries is long‐term care. Identifying the best performers in the industry in terms of service productivity is difficult because there is no single summary measure of outcomes, particularly quality outcomes. The purpose of the paper is to show the potential of data envelopment analysis (DEA) as a benchmarking method in long‐term care. Design/methodology/approach – The paper provides background information on the long‐term care industry and describes the DEA methodology and applications to long‐term care. Data originated from two data sources with four databases furnishing information on 69 long‐term care facilities used. Findings – In the hypotheses tested it was found that most of the models showed that for profit nursing homes were significantly more efficient than nonprofit. The exception was in the model that included the condition of patients as a co‐production input and then there was no significant difference in efficient performance between ownership types. Originality/value – The paper shows the value of DEA as a method of benchmarking in the context of long‐term care.