Abstract:
Productivity analysis is an aspect of health care performance measurement that deals primarily with the accountability of an organisation. In Nepalese public hospitals, performance measurement relies largely upon historical ratio analysis without benchmarks. Previous empirical research has analysed the efficiency of district level hospitals but policy makers need a broader picture of the effectiveness of current public investment in the hospital sector. This study explores the trends in inputs, outputs and productivity change in Nepalese public hospitals, and the factors associated with such variations, from 2011/12 to 2013/14. Input-output ratio analyses, as well as a two-stage Data Envelopment Analysis, were performed for a total of 96 observations (32 hospitals over three years). The productivity variations were measured in terms of Malmquist Productivity Indexes, and Tobit regression analysis assessed the effects of environmental variables on hospital efficiency. Inputs and overall productivity of the study hospitals declined with a marginal increase in outputs over the study period. Productivity change declined at an average annual rate of seven percent and technology decline led the productivity losses. Large variations existed in the performance of individual hospitals. Hospitals having higher occupancy, located in Kathmandu valley and Terai regions, and district level hospitals compared to the hospitals having lower occupancy, located in Mountain and Hill regions, and higher level hospitals are likely to be more efficient. Other factors which may affect hospital efficiency include: gradual expansion of information and communication technology, appropriate staff mix and skill mix, provision of part-time staff, and less investment in hospital administration, particularly the top level. However, these need to be tested in the context of Nepalese hospitals. Large data gaps were found in the study hospitals. More accurate and consistent recording and reporting of data would improve our understanding of the hospital performance and assist in identifying appropriate interventions for improving hospital efficiency and productivity. Key words: Efficiency, Productivity, Data Envelopment Analysis, Hospital, Nepal