Efficiency and productivity change in the English National Health Service: can data envelopment analysis provide a robust and useful measure?

Abstract

Objective: Several tools are available to health care organisations in England to measure efficiency, but these are widely reported to be unpopular and unusable. Moreover, they do not have a sound conceptual basis. This paper describes the development and evaluation of a user-friendly tool that organisations can use to measure their efficiency, based on the technique of data envelopment analysis (DEA), which has a firm basis in economic theory.

Methods: Routine data from 57 providers and 14 purchasing organisations in one region of the English National Health Service (NHS) for 1994-1996 were used to create information on efficiency based on DEA. This was presented to them using guides that explained the information and how it was to be used. They were surveyed to elicit their views on current measures of efficiency and on the potential use of the DEA-based information.

Results: The DEA measure demonstrated considerable scope for improvements in health service efficiency. There was a very small improvement over time with larger changes in some hospitals than others. Overall, 80% of those surveyed gave high scores for the potential usefulness of the DEA-based measures compared with 9-45% for existing methods. The quality of presentation of the information was also consistently high.

Conclusions: There is dissatisfaction with efficiency information currently available to the NHS. DEA produces potentially useful information, which is easy to use and can be easily explained to and understood by potential users. The next step would be the implementation, on a developmental basis, of a routine DEA-based information system.