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

The European Journal of Health Economics volume 16, pages 459–469 (2015)Cite this article

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.

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Affiliations

  1. Operations and Management Department, Faculty of Business Administration, Gebze Institute of Technology, No. 101, 41400, Gebze, Kocaeli, Turkey

    Mehmet Sahin Gok

  2. Department of Administrative Science, Beykent University, Taksim, Istanbul, Turkey

    Erkut Altındağ

Authors
  1. Mehmet Sahin Gok
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  2. Erkut Altındağ
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Correspondence to Mehmet Sahin Gok.

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Gok, M.S., Altındağ, E. Analysis of the cost and efficiency relationship: experience in the Turkish pay for performance system. Eur J Health Econ 16, 459–469 (2015). https://doi.org/10.1007/s10198-014-0584-6

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  • DOI: https://doi.org/10.1007/s10198-014-0584-6

Keywords

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

JEL Classification

  • C14
  • C23
  • D24
  • I15
  • I18