The trade-offs between efficiency and quality in the hospital production: Some evidence from Shenzhen, China

This study aims to examine the trends of productivity, efficiency and quality changes of hospitals in Shenzhen city over the period 2006–2010 and explore whether there is a trade-off between efficiency and quality in the hospital production. A three-stage data envelopment analysis (DEA) based Malmquist productivity index is used to estimate the changes of productivity, efficiency and quality. The results show that both public and private hospitals have experienced a productivity growth and a negative evolution in efficiency and quality changes between 2006 and 2010. The average annual productivity growth rates of public and private hospitals are 4.1% and 2.8% respectively; the average annual reduction rates of efficiency are 1.8% and 1.2% respectively; the quality declines on average by 2.5% and 7.2% per year respectively. We may not rule out the existence of efficiency and quality trade-off in our study. This possible trade-off is mainly found in the small and medium-sized hospitals. Our results are robust when varying the specification of the DEA model.