DEPARTMENT OF ECONOMICS

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    ESTIMATING THE RELATIVE EFFICIENCY OF PUBLIC AND PRIVATE HOSPITALS IN THE SOUTH-WEST, NIGERIA
    (UNIVERSITY OF ILORIN, 2018-06) AFOLABI, IBIKUNLE JOSEPH
    The objective of health systems includes effectiveness, efficiency, equity and quality. To achieve these, depend on the health policy, health expenditure, national income and access to health services. Nigeria is ranked 187 of the 191member nations of WHO based on her health system performance. Some literature blamed this performance on health expenditure, price and income, others opined that some low-income countries have sufficiently better health outcomes depending on political will, but not much has been done on efficiency and its spread across both the public and private hospitals. This study therefore, estimates the relative efficiency of public and private hospitals in the South–west, Nigeria. The objectives were to: i) estimate the technical efficiency of the hospitals; ii) determine the allocative and cost efficiency; iii) assess the role of technical efficiency change and technological change in driving their total factor productivity; and iv) measure the pattern of efficiency growth in total factor productivity (TFP) among the health care providers. The input-oriented constant returns to scale theory was used. Given that most hospital data are not readily available, convenience sampling method was employed to select 10 private and 10 public hospitals from each of Lagos, Ogun, Ondo, Osun and Oyo States from 2007 to 2016. Data Envelopment Analysis was used to calculate the efficiency while Malmquist Productivity Index (MPI) measured the productivity growth at MPI>1 = progressing, MPI<1= deteriorating and MPI=1 denote stagnating. The findings of the study were that: i. both public and private hospitals are technically efficient but the former are more efficient than the latter with general mean (0.722 and 0.661) respectively; ii. both allocative and cost efficiency (0.675 and 0.438) are higher in the public hospitals than private (0.411 and 0.256), respectively; iii. productivity growth displayed inconsistency for both public and private hospitals with technical efficiency change (1.262 and 1.103= progressing for 2007/2008; 0.691 and 0.865= deteriorating for 2008/2009) and technological change (0.681 and 0.929= deteriorating for 2007/2008; 1.877 and 1.113= progressing for 2008/2009); iv. total factor productivity (the product of technical efficiency change and technological change) behaved prototype with technical efficiency change and technological change for both public and private hospitals, but are generally deteriorating with productivity scores of 0.971 and 0.968, respectively; and v. cost efficiency score in descending order ranked Lagos, Ogun, Oyo, Ondo and Osun States for public, while Ogun, Osun, Ondo, Oyo and Lagos for private. The study concluded that public hospitals are more technically efficient than private hospitals, but both are cost-inefficient and deteriorating in productivity growth. The study recommended that the Ministries of Health should equip the hospitals towards the changing health demands. While ensuring compliance to operational policy by private hospitals, cost of operation should be competitive for both the private and public hospitals.