Technical efficiency in public hospitals in Kenya
Rithaa, Koome Gilbert
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The World Health Organization called attention to the importance of efficiency in all functions of a health system for the ultimate achievement of the goals of health improvement, stewardship, responsiveness and fairness in financing. Although, efficiency improvement should be seen as a strategy for mobilizing domestic resources and utilizing the available resources without waste to achieve the desired health sector goals, it is not usually the case especially in low income countries like Kenya despite health facilities receiving over 75% of the total recurrent budget from Government allocation. Over the past years, there has been little health outcome improvement despite significant increase in budgetary allocation to the health sector especially the health facilities. Therefore, quantifying the current level of efficiency in the hospitals is an accepted strategy in dealing with inefficiencies and enhancing the scarce resource optimization. The general objective of this study was to assess the technical efficiency in public hospitals in Kenya. The study used an analytical and descriptive study design employing econometric techniques for data analysis. Simple random sampling was used to select a study sample of 30 level 4 hospitals in Kenya. A cross sectional model was used to analyze secondary data collected from District Health Information System using Data Envelopment Analysis to determine efficiency levels while interval regression was used to establish determinants of inefficiency. Results indicated that 50% of the hospitals were Constant Returns to Scale technically efficient with a mean efficiency score of 80.6% while 66.6% of the hospitals were Variable Returns to Scale technically efficient with a mean efficiency score of 92.7%. In terms of Scale Efficiency, 50% of the hospitals were scale efficient with a mean efficiency score of 86.8% score. There was a constant return to scale in 50% of the hospitals, increasing returns to scale in 40% of the hospitals and decreasing returns to scale in 10% of the hospitals. The mean level of technical inefficiency was 21.9%. The total inputs slacks in the inefficient hospitals were 122 beds and 454 staff which represented an input slack of 7.3% for the beds and 22.1 % for the staff. All the inefficient hospitals required a 27.6% increase in total outpatient visits which translated to an additional 217, 547 outpatient visits. A total of 5,006 discharges were required which was a 9.2% increase in total discharges. Further, all the inefficient hospitals required to augment their operations capacity with a sum of 1,596 operations which represented a 31.3% increase in total operations for them to be technically efficient. Interval regression analysis results showed that outpatient to inpatients visits ratio, bed occupancy ratio, inpatient discharges to death ratio, National Health Insurance Fund bed days to bed days of those not enrolled in National Health Insurance Fund, gross death rate influence technical inefficiency levels. In conclusion, a substantial proportion of public hospitals were technically inefficient due to inappropriate production sizes occasioned by use of excess production inputs to produce sub-optimal outputs. Therefore, there is need for effective policy and managerial interventions for dealing with the existing production slacks and factors influencing inefficiency in the hospitals.