Technical and scale efficiency in public and private Irish nursing homes – a bootstrap DEA approach

This article provides methodological and empirical insights into the estimation of technical efficiency in the nursing home sector. Focusing on long-stay care and using primary data, we examine technical and scale efficiency in 39 public and 73 private Irish nursing homes by applying an input-oriented data envelopment analysis (DEA). We employ robust bootstrap methods to validate our nonparametric DEA scores and to integrate the effects of potential determinants in estimating the efficiencies. Both the homogenous and two-stage double bootstrap procedures are used to obtain confidence intervals for the bias-corrected DEA scores. Importantly, the application of the double bootstrap approach affords true DEA technical efficiency scores after adjusting for the effects of ownership, size, case-mix, and other determinants such as location, and quality. Based on our DEA results for variable returns to scale technology, the average technical efficiency score is 62 %, and the mean scale efficiency is 88 %, with nearly all units operating on the increasing returns to scale part of the production frontier. Moreover, based on the double bootstrap results, Irish nursing homes are less technically efficient, and more scale efficient than the conventional DEA estimates suggest. Regarding the efficiency determinants, in terms of ownership, we find that private facilities are less efficient than the public units. Furthermore, the size of the nursing home has a positive effect, and this reinforces our finding that Irish homes produce at increasing returns to scale. Also, notably, we find that a tendency towards quality improvements can lead to poorer technical efficiency performance.