Technical efficiency in Irish public hospitals: a multi-output distance function SFA approach

This paper estimates output-oriented technical efficiency (TE) for 37 acute public hospitals in Ireland using monthly panel data for the years 2017-2018. To allow an accurate estimation of multi-output production technology, we utilise a trans-logarithmic output distance function (ODF) and apply the true random-effects (TRE) stochastic frontier model which accounts for both transient and persistent inefficiency. The findings indicate that Irish hospitals operate with an average short-run efficiency score of 0.93-0.94, whereas the persistent efficiency is 0.90. Furthermore, all input elasticities are positive but the returns to scale are decreasing. Inpatient discharges account for the highest output elasticity and the highest marginal rate of transformation. While the hospital model-type increases the level of output in hospitals, the share of emergency patients negatively affects the hospitals' production. Moreover, the length of stay is an important contributor to hospitals' inefficiency and medium-sized hospitals with 200 to 400 beds are the most efficient hospital units.