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The challenge of corporatisation: the experience of Portuguese public hospitals

The European Journal of Health Economics volume 11, pages 367–381 (2010)Cite this article

Abstract

The inability of traditional state organisations to respond to new economic, technological and social challenges and the associated emerging problems has made it necessary to adopt new methods of health management. As a result, new directions have emerged in the reform of Public Administration together with the introduction of innovative models. The aim is to achieve a type of management that focusses on results as well as on effort and efficiency. We intend to analyse to what extent the adoption of business management models by hospital healthcare units can improve their performance, mainly in terms of standards of efficiency. Data envelopment analysis (DEA) was used to investigate the efficiency of a set of public Portuguese hospitals. The aim was to evaluate the impact of business management in Portuguese public hospitals with regards to efficiency, specifically taking into account the fact that lack of resources and increased health care needs are a present and future reality. From a total of 83 public hospitals, a sample of 59 hospitals was chosen, of which 21 are state-owned hospital enterprises (SA) and 38 are traditional public administration sector hospitals (SPA). This study evaluates hospital performance by calculating two efficiency measures associated with two categories of inputs. The first efficiency measures the costs associated with hospital production lines and the number of beds (representing fixed capacity) as inputs. The annual costs generated by the hospitals in the consumption of capital and work (direct and indirect costs) are used. A second measure of efficiency is calculated separately. This measure includes in the inputs the number of beds as well as the human resources available (number of doctors, number of nurses and other personnel) in each hospital. With regard to output, the variables that best reflect the hospital services rendered were considered: number of inpatient days, patients discharged, outpatient visits, emergencies services, sessions in hospital day care services and the number of surgeries. The results seem to suggest that the introduction of market processes and changes in organisational structure—such as managerial autonomy and corporatisation of public hospitals—have had a positive impact on Portuguese public hospitals. This positive evolution was particularly evident in SA hospitals, but further studies are needed to confirm these preliminary results.

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Notes

  1. SFA is an econometric approach that requires the specification of a functional form for the efficient frontier as well as the distributional assumptions for the inefficiency and error terms. In this approach, deviations from the efficient frontier are considered as being either because of inefficiency or because of random effects.

  2. Scale efficiency score = CRS TE Score/VRS TE Score.

  3. While the CCR model maintains the assumption of CRS, the Banker, Charnes, and Cooper (BCC) model allows the VRS to prevail.

  4. This window analysis methodology has previously been used where the use of cross-sectional and panel designs has proved unsatisfactory to measure efficiency. Windows analysis is a tabular method that allows for an analysis of efficiency changes and enables the researcher to determine periodic variations of the relative performance of DMUs.

  5. That is, results based on the mean estimated efficiency scores obtained for each group of hospitals and for each year.

  6. In this case, we treated the omission cases as suggested by Kuosmanen [36], giving a sufficiently high value to the input “Costs with Hospital Day Care Services” and a null value to the output “No. of Sessions in Hospital Day Care Services”.

  7. The average score of efficiency for each type of hospital in each year is the arithmetical mean of the estimated efficiency scores.

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Affiliations

  1. Faculty of Medicine, University of Porto, Alameda Prof. Hernâni Monteiro, 4200-319, Porto, Portugal

    Guilhermina Rego & Rui Nunes

  2. Faculty of Economics, University of Porto, Porto, Portugal

    José Costa

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  1. Guilhermina Rego
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  2. Rui Nunes
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  3. José Costa
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Correspondence to Guilhermina Rego.

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Rego, G., Nunes, R. & Costa, J. The challenge of corporatisation: the experience of Portuguese public hospitals. Eur J Health Econ 11, 367–381 (2010). https://doi.org/10.1007/s10198-009-0198-6

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Keywords

  • Corporatisation
  • Efficiency measurement
  • Hospital services
  • Data envelopment analysis

JEL Classification

  • I
  • I-1
  • I-18