The European Journal of Health Economics

, Volume 16, Issue 5, pp 459–469 | Cite as

Analysis of the cost and efficiency relationship: experience in the Turkish pay for performance system

Original Paper

Abstract

This paper analyzes the effects of the pay for performance (PFP) system on the efficiencies of public and private hospitals in Turkey. In order to evaluate these effects, we examine the relationship between hospital efficiency and health care costs in Turkey, and address the impact of the PFP system on the efficiencies of public and private hospitals. In an effort to analyze the efficiencies of public and private hospitals, this study uses data envelopment analysis. The Malmquist Productivity Index is also used to analyze the patterns of efficiency change for the study years from 2001 to 2008. This study shows that health care costs and hospital efficiency are negatively correlated for private hospitals, while they are positively correlated for public hospitals. In other words, increased health care costs might reduce efficiency in private hospitals in contrast to public hospitals. Our findings also indicate that average efficiencies of public hospitals tend to increase, particularly during the implementation period of PFP system. The efficiency trend of private hospitals, conversely, decreased in the latter periods of the PFP system. Suggestions for improvement are provided to the health care policy makers regarding the impact of health care reforms on public and private hospitals.

Keywords

Hospital efficiency Health care costs Data envelopment analysis Public and private hospitals Pay for performance system 

JEL Classification

C14 C23 D24 I15 I18 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  1. 1.Operations and Management Department, Faculty of Business AdministrationGebze Institute of TechnologyGebzeTurkey
  2. 2.Department of Administrative ScienceBeykent UniversityTaksimTurkey

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