A major health policy concern is the presence of inefficiencies in health care provision. This study
estimates the technical efficiency for ambulatory services and inpatients care in private sector
hospitals in Pakistan. Efficiency scores for the sample hospitals, estimated using Stochastic Frontier Analysis, are
aggregated at the regional (district) level to identify the existence of spatial interdependence. The results from the
spatial analysis suggest that efficiency has a positive spillover for outpatient care in small hospitals. Big hospitals,
however, show inconsistent results. We concluded that small hospitals compete in outpatients with the motive of
1-Saima Bashir PhD Scholar,Department of Economics, Pakistan Institute of Development Economics, Islamabad, Pakistan.