Abstract

This paper is a first attempt to examine efficiency in the Zimbabwean hospital sector using the non-parametric data envelopment analysis (DEA) methodology. The paper evaluates whether for-profit hospitals are significantly more efficient than non-profit hospitals in order to shed some light on the role of profit incentives as implied by the theory of property rights. DEA findings revealed that there was a marked deviation of efficiency scores from the best practice frontier with for-profit hospitals having the highest mean overall technical efficiency (OTE) score of 61.4%. The mean OTE scores for mission and public hospitals were 35% and 50.3% respectively. Evidence from the second stage, Tobit model suggested that while both for-profit hospitals and government hospitals were both important in influencing efficiency, for-profit hospitals had a higher marginal mean efficiency score than government hospitals.

Key words: Profit incentives, data envelopment analysis, allocative efficiency, overall technical efficiency, pure technical efficiency, scale efficiency, Censored Tobit model.