Technical Efficiency of selected public Hospitals in Ethiopia

The paper primarily attempts to investigate the level of efficiency at which public hospitals are operating in Ethiopia by taking eight sample hospitals from selected regions of the country. The study employs both descriptive and regression analyses. While the former method mainly focuses on the description of the sample hospitals' major characteristics and the relationships among them, the latter one tries to measure technical efficiency by conducting production frontier analyses on two major health care service areas: outpatient and inpatient services. The major variables included in the production frontier function are the labour time of the technical staff (that consists of physicians, nurses, health assistants, laboratory and X-ray technicians, and pharmacists), the labour time of the administrative and support staff, and values attached to depreciation and supply of drugs. The preliminary tests undergone reveal that some degree of inefficiencies are observed in the provision of outpatient services of three hospitals and inpatient services of only one hospital. According to the production frontier result, the outpatient visits in the efficiently operating hospitals tend to increase with the increase in the labour input of the technical staff and decrease with that of the non-technical staff. But in the inefficiently operating hospitals, the activities of both the technical and non-technical staff are seen to produce a positive impact on the outpatient visits. On the other hand, the values attached to depreciation and costs of drugs are found to strongly and directly affect the production process of only two of the efficiently operating health care providing units and one of the inefficient ones. The inadequate remuneration provided to the technical staff is the main cause for the inefficiency of the outpatient services. With regards to the inpatient services, the activities of the technical staff and depreciation and drug costs are found to positively contribute to the number of inpatient days in the majority of efficiently functioning hospitals. But the production of inpatient health care in the only inefficient hospital is highly and negatively affected by the labour time of the non-technical staff. It can thus be suggested that improving the number and quality of the professional health staff and upgrading the physical and technical capabilities of hospitals increases the efficiency with which they are producing health care services. It would also be necessary to take further policy measures in order to reduce the burden of public hospitals and improve the quality of health care services in the country.