Impact of pilot public hospital reform on efficiencies: a DEA analysis of county hospitals in East China, 2009–2015

Background: China started a pilot public hospital reform in 2012 to improve governance and efficiency in healthcare services delivery among county-level hospitals. This study aims to investigate the impact of the pilot reform on hospital efficiency and productivity by using a unique dataset of county hospitals in East China during 2009–2015. Methods: A three-stage approach is used. First, this study uses the output-oriented data envelopment analysis (DEA) to estimate hospital efficiency with variable returns to scale. Second, propensity score matching is used to address potential biases associated with the selection of counties for the pilot program. In the third stage, we assess the impact of the pilot reform on efficiency by using a Tobit Difference-in-Differences approach. Results: The average level of hospital efficiency for the whole sample experienced a rapid drop in 2013, then returned to a peak in 2014. Except in the reform year (2012), the overall hospital efficiency for the post-reform period is higher than that for the pre-reform period. The baseline model results show that the pilot reform is associated with a 3% decline in pure technical efficiency and a 2.3% increase in hospital scale efficiency, respectively. Our findings are robust when we apply bootstrapped DEA efficiency scores and use different specifications. Conclusion: The findings of this study suggest no improvements in overall hospital efficiency associated with the pilot reform, possibly due to the combined effects of inefficient governance and hospital scale expansion. This study suggests that further efforts are needed to increase county hospital performance by strengthening management and optimizing resource utiliziation.