Evaluation of technical efficiency of acute hospitals and its relation to wages of health personnel

Evaluation of efficiency in the health care sector is an important topic of public policy. This paper analyzes technical efficiency of 119 Czech hospitals in 2005 by data envelopment analysis (DEA). DEA is a method based on the production theory and the mathematical programming that specifies the production frontier as the most pessimistic piecewise linear envelopment of the data. We analyze the sample with the input-oriented constant-returns-to-scale model (the CCR-I model) and the input-oriented variable-returns-to-scale model (the BCC-I model). For an inefficient hospital, the method determines the sources of inefficiency and corresponding target values. We found no strong correlation between technical efficiency and wages of health personnel.