INTRODUCTION TO DATA ENVELOPMENT ANALYSIS AND A CASE STUDY IN HEALTH CARE PROVIDERS

Data Envelopment Analysis is a methodology which is used to determine relative efficiencies between decision making units (DMU). It can be used in various industries such as hospitals, banks and schools to name a few. The objective of this thesis is to provide a comparative analysis of different DEA models using an actual application to the health care industry. A detailed literature review of DEA models is provided which covers research on weight restriction methods, models incorporating multiple criteria with DEA, super efficiency in DEA and ranking methods in DEA.Four important models in DEA are discussed in detail. They include the CVDEA model, MCDM DEA model, AHP DEA model and the Super Efficiency model. DEA is a very useful tool but it has its disadvantages including the existence of extreme outliers in a set of efficient DMUs and weight restriction capabilities of certain models. The models chosen in this research focuses on methods to eliminate the drawbacks of earlier DEA models. Multi criteria decision making (MCDM) and the Analytical Hierarchy Processes (AHP) are two of the methods which when combined with DEA provide added functionality. The concept of Super Efficiency in DEA is also used in one of the chosen models.A case study has been conducted to determine the efficiency of health care providers. The four DEA models are evaluated for 44 health care providers with real data and meaningful results are obtained. The results for the efficiency classification provided by the models are similar but the four models have provided some additional information unique to their approaches. The AHP DEA model and the Super Efficiency model are judged to be better models on the basis of the practical insights they provided to the health care provider.