Economic performances of U.S. non-profit hospitals using the Malmquist productivity change index

This study evaluated the productivity of non-profit hospitals in the USA in applying DEA-base Malmquist productivity Change index, decomposed into technical efficiency change index and technical progressive change index. Data used for this analysis consisted of 118 non-profit hospital utilization data and financial statements from 1993 through 2003. DEA-based Malmquist was conducted to measure the productivity of non-profit hospitals. This study finds the productivity of non-profit hospitals has increased over the period of 1999-2003. Assessing productivity by hospital size, small-sized hospitals having less than 130 beds are most productive due to technical progress. This study suggests that non-profit hospitals need to downsize their facilities or make adjustments, such as changes of cost structure and facility operation, or adoption of new management to increase productivity. Government bodies also need to develop and enact health policies to ensure that hospitals can increase productivity in both technical progress and efficiency improvement.