A two-stage approach in assessing the level of economic performance : a combination of stochastic frontier and mimic model

This paper combines the use of stochastic frontier and MIMIC model is assessing the level of economic performance of health care foodservice operations. The stochastic frontier was used as part of a first-stage analysis to estimate the level of technical, allocative and cost efficiency of health foodservice operations. In the second stage, these efficiency estimates were included in a MIMIC model framework as imperfect indicators for an inherently latent variable-economics performance. The first stage results showed that the average levels of technical, allocative and cost efficiency were equal to 80 %, 88 %, and 70% respectively, indicating that technical efficiency is the main source of cost inefficiency and requires further attention. The results from the MIMIC model showed a positive and significant relationship between the years of a manager's experience, years of a manager's education and economic performance. This highlights the importance of these two variables in improving the level of economic performance of health care foodservice operations.