Abstract
In this paper we use non‐parametric mathematical programming models to compute and decompose Malmquist indices of productivity and quality change, which are used to evaluate the reforms in the UK National Health Service in the early nineties. We focus on acute hospitals and we study them over the first five years of the reforms. The findings of the study indicate that there was a productivity slowdown in the first year after the reforms but productivity progress in the subsequent years and thus, overall there was a net gain in productivity over the entire period considered. Productivity trends were dominated by technical change rather than hospital relative efficiency changes, as hospitals were already largely relatively efficient at the time of the introduction of the reforms. In fact, over the last four years in the period studied there was small relative efficiency regress and this does not bear out the argument that the reforms would increase hospital efficiency. The productivity changes are similar when service quality is incorporated in the analysis but the magnitude of these changes diminishes. Quality of service followed different trends to productivity change and this may have been the price for the productivity gains achieved.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
W. Bartlett and J. Le Grand, The performance of trusts, in: Evaluating the NHS Reforms, eds. Robinson and J. Le Grand (Kings Fund, London, 1994).
J. Burgess and P. Wilson, Decomposing hospital productivity changes, 1985–1988: a nonparamatric Malmquist approach, J. Productivity Analysis 6 (1995) 343–363.
G. Debreau, The coefficient of resource utilisation, Econometrica 19 (1951) 273–292.
R. Färe, Fundamentals of Production Theory (Springer, Berlin, 1988).
R. Färe and S. Grosskopf, Understanding the Malmquist productivity index, Discussion Paper No 94-5, Southern Illinois University, IL (1994).
R. Färe, S. Grosskopf, B. Lindgren and P. Roos, Productivity developments in Swedish hospitals: a Malmquist output index approach, Discussion paper No 89-3, Southern Illinois University, IL (1989).
R. Färe, B. Grosskopf, B. Lindgren and J.P. Poullier, Productivity growth in health care delivery, Medical Care 35 (1997) 354–366.
R. Färe, S. Grosskopf and C.A.K. Lovell, Production Frontiers (Cambridge Univ. Press, Cambridge, 1994).
R. Färe, S. Grosskopf, M. Norris and Z. Zhang, Productivity growth, technical progress and efficiency change in industrialized countries, American Economic Review 84(1) (1994) 66–83.
R. Färe, S. Grosskopf and P. Roos, Productivity and quality changes in Swedish pharmacies, International Journal of Production Economics 39 (1995) 137–144.
R. Färe, S. Grosskopf and R.R. Russell, eds., Index Numbers: Essays in Honour of Sten Malmquist (Kluwer Academic, Boston, 1998).
R. Färe and D. Primont, Multi-output Production and Duality: Theory and Applications (Kluwer Academic, Boston, 1995).
M.J. Farrell, The measurement of productive efficiency, J. Royal Statist. Soc. 120(3) (1957) 153–281.
S. Grosskopf and V. Valdmanis, Evaluating hospital performance with case-mix-adjusted outputs, Medical Care 31(6) (1993) 525–532.
C. Harper, Hospital cost analysis: a comparative study of output aggregation methods, in: Proc. 5th European Workshop on Economics and Health Economics, 11–13 September, Barcelona (1996).
B. Hollingsworth and D. Parkin, The efficiency of Scottish acute hospitals — an application of Data Envelopment Analysis, IMA J. Math. Applied in Medicine and Biology 12 (1995) 161–173.
J. Magnussen, Hospital efficiency in Norway: a nonparametric analysis, Dissertation in Economics, No 6, University of Bergen (1994).
S. Malmquist, Index numbers and indifference surfaces, Trabajos de Estatistica 4 (1953) 209–242.
N. Maniadakis and L. Read, A note on Malmquist productivity index, Research Paper No 278, Research Bureau, Business School, University of Warwick, Coventry (1997).
National Health Service in Scotland, Clinical Outcome Indicators (Scottish Office, Edinburgh, 1996).
J.P. Newhouse, An iconoclastic view of health cost containment, Health Affairs, Supplement 12 (1993) 152–171.
D. Parkin and B. Hollingsworth, Measuring production efficiency of acute hospitals in Scotland 1991–1994: validity issues in Data Envelopment Analysis, Applied Economics 29 (1997) 1425–1438.
W.B. Schwartz and D.N. Mendelson, Eliminating waste and inefficiency can do little to contain costs, Health Affairs 13 (1994) 224–238.
R.W. Shephard, Cost and Production Functions (Princeton Univ. Press, Princeton, 1953).
R.W. Shephard, Theory of Cost and Production Functions (Princeton Univ. Press, Princeton, 1970).
N. Söderlund, I. Csaba, A. Gray, R. Milne and J. Raftery, Impact of the NHS reforms on English hospital productivity: an analysis of the first three years, British Medical J. 315 (1997) 1126–1129.
E. Thanassoulis, A. Boussofiane and R. Dyson, Exploring output quality targets in the provisions of perinatal care in England using Data Envelopment Analysis, European J. Oper. Res. 80 (1995) 588–607.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Maniadakis, N., Hollingsworth, B. & Thanassoulis, E. The impact of the internal market on hospital efficiency, productivity and service quality. Health Care Management Science 2, 75–85 (1999). https://doi.org/10.1023/A:1019079526671
Issue Date:
DOI: https://doi.org/10.1023/A:1019079526671