Performance of Public Hospitals in Malaysia and Its Determinants: An Analysis Using Data Envelopment and Tobit Model

The aim of this paper is to examine the efficiency of public hospitals in Malaysia and identify the factors affecting their performance. We used the non-parametric Data Envelopment Analysis (DEA) in the first stage to find the efficiency score and utilized tobit model in the second stage to identify the determinants. Our analysis was based on 25 public hospitals in the northern region of Malaysia which we divided into two classifications i.e specialist and non-specialist. Data were obtained for three years from 2008 to 2010. Results show that the technical efficiency scores for specialist hospitals ranged between 0.728 and 1 while for non-specialist, it was between 0.726 and 1 over the period of study. The scale efficiency scores reveal that the majority of specialist hospitals exhibited decreasing returns to scale (DRS) but as for the non-specialist, the majority manifested increasing returns to scale (IRS). From the tobit model, it was found that the daily average number of admission, the number of outpatient per doctor and hospital classification have significant influenced on efficiency.