Productivity Changes in Finnish Health Centres: A Malmquist Index Approach

This paper studies productivity development of Finnish health centres in 1988-95 by applying different specifications of Malmquist index. As input variables we use operating costs or the number of personnel by employee category, and as output variables different kinds of visits, bed days and discharges. Measuring input use by operating costs gives more positive estimates of productivity change than those obtained by measuring inputs by the number of personnel. This suggests that productivity growth can partly be explained by changes towards a more efficient input mix in health centres. The choice of the base year had only a small effect on productivity change estimates. The results show that the productivity decline of health centres which was quite substantial all through the 1970s and 1980s reversed to a rise from 1990 onwards. The turn in productivity development occurred at the same time as the state and municipalities experienced severe financial difficulties due to recession and falling tax revenues.