Measuring Technical Efficiency of Faith Based Hospitals in Tanzania: An application of Data Envelopment Analysis (DEA)

Abstract

By employing data envelopment analysis (DEA), this study examines efficiency of
faith-based (private not for profit-PNFP) hospitals in Tanzania. Using data from 15 hospitals,
particularly Volunteering Agency Hospitals (VAHs), our study period covered the year 2009-
2012. The objective of this study is to determine technical efficiency of Volunteering Agency
Hospitals (VAHs) as well as scale efficiency and hence establish how the inefficiency in these
hospitals (VAHs) can be reduced in Tanzania. Significance of this Study premises on
equipping the hospitals administrators, governing boards, owners as well as healthcare policy
makers with relevant information on how to improve hospitals efficiency. Additionally,
through deliberating on the generalization of efficiency of the faith-based hospitals the study
will add to the existing literatures on the efficiency of religious hospitals particularly in
Tanzania.
Based on measures of technical efficiency the average efficiency index (for all hospitals) was
0.769 (76.9%) and total number of technically efficient was 4 (26.6%) hospitals. The result
shows that, average annual technical efficiency for the VAHs was 59.79% in the year 2009,
60.01% in the year 2010, 57.49% in the year 2011 and 55.08% in the year 2012, which
implies that there was no improvement in the technical efficiency. However, most of the
hospitals (73.33%) have increasing returns to scale (IRS) which means therefore that, if more
resources will be equally allocated to these hospitals (with IRS) there will be proportionate
increase in production of health services hence catching up the production frontier.