Market oriented reforms of health services: A non-parametric analysis

During the 1990s the UK carried out one of the first experiments at introducing competition for hospital services, on the assumption that this would enhance their efficiency. This paper analyses this assumption by estimating DEA frontiers and calculating Malmquist indexes of TFP in order to measure the changes in productivity and technical efficiency of a sample of hospitals during that reform. The results show an average mild improvement in the frontier accompanied by a worsening of technical efficiency, no positive link between the reform and higher efficiency and a change in techniques not necessarily beneficial to patients.