Application of Data Envelopment Analysis for Efficiency Evaluation in the Health Services

Data Envelopment Analysis (DEA) is a method of efficiency evaluation of production units. The strengths of DEA are: (1) the method is able to deal with multiple inputs and outputs; (2) for technically inefficient unit DEA identifies the peers that are real production units, (3) software for DEA is now available, which makes it is easy to carry out all calculations and present results. The main weaknesses of DEA are: (1) a deterministic nature of method. Because DEA does not include an error term in the model, there is possibility of a measurement error; (2) hypothesis testing is much less developed in DEA in a comparison to econometric analysis. DEA proved to be a very attractive method of efficiency evaluation for health economists throughout the world. DEA is now mentioned in the textbooks of health economics. There is no doubt that the number of applications in the health services will be growing.