Estimating technical efficiency of Turkish hospitals: implications for hospital reform initiatives

BACKGROUND: The Government of Turkey has initiated a series of major health reforms in 2003 with an objective of increasing access to health care services and improving efficiency of public and private hospitals. This study attempts to understand the technical efficiency of public and private hospitals in Turkey to better guide hospital reform. METHODS: We use data from 1079 public and private hospitals and translog stochastic production frontier was adopted to estimate technical inefficiency of hospitals. RESULTS: Results indicate that there is no statistically significant difference in the degree of inefficiency of hospitals by geographic location or its level of economic development. Efficiency scores vary significantly across hospital types with Ministry of Health (MoH) General Hospitals being the most efficient followed by MoH teaching hospitals. Better performance of MoH hospitals may be due to successful implementation of 2003 health reforms in Turkey, which intended to improve resource utilization within and across MoH hospitals. Among MoH hospital types, integrated county hospitals were the least efficient. Since the hospital outcome measure did not include the value of medical training, efficiency scores of university hospitals became relatively low. Wide variability of efficiency scores of private general hospitals implies the existence of both highly efficient and inefficient hospitals in the private sector. CONCLUSIONS: Efficiency differences of various hospital types can be leveraged to guide future reforms by emphasizing the strengths of general hospitals and improving the referral system from county hospitals to general hospitals. Encouraging resource sharing across hospitals, as being done by the 2011 reforms, should further improve hospital efficiency. Promoting private hospitals may not necessarily be efficiency enhancing due to high variability of private hospitals in terms of efficiency scores. Similarly, implementation of common productivity standards and quality control measures are likely to improve hospital technical efficiency scores further.