Performance of Belgian hospitals: a frontier approach

The purpose of the paper is to measure and to compare performance of Belgian hospitals during the year 1991. In order to measure hospitals' efficiency, we estimate a resource function which is defined as the relationship between medical fees incurred in the treatment of a patient and the patient's pathology. From this relation, we construct a best practice reference frontier which defines the minimal hospital medical fees needed to treat the pathology. Efficiency is assessed relative to this resource frontier using a parametric stochastic method proposed by Schmidt and Sickles. It appears that some specializations (circulatory system) involve more overproduction than others. Among the other results, we note that public hospitals are more efficient than the private ones and that university hospitals tend to use more resources than regular hospitals. The relationships between efficiency and different variables (location, size, costs and management) are finally analysed.