Health care financing reform and the productivity change in Finnish hospitals

Abstract

The purpose of this study was to analyze productivity and efficiency changes in the production of hospital care in Finland during the period 1988-1994. A special interest was directed to years 1993-1994 because of health care financing reform that took place in 1993. The analysis is based on the Malmquist index approach using linear programming. Positive productivity changes were found particularly towards the end of the observation period, although a few years did not show significant improvements in productivity and efficiency. There was a significantly higher rate of productivity change in 1992-1993 and 1993-1994, suggesting that the state subsidy reform in 1993 may have strengthened hospitals' efforts to improve performance.