ARTICLE

EXPLORING THE SPATIAL INTERDEPENDENCE IN EFFICIENCY OF PRIVATE HOSPITALS IN PAKISTAN

03 Pages : 21-35

http://dx.doi.org/10.31703/gssr.2020(V-I).03      10.31703/gssr.2020(V-I).03      Published : Mar 2020

Exploring the Spatial Interdependence in Efficiency of Private Hospitals in Pakistan

    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 profit maximization.

    (1) Saima Bashir
    PhD Scholar,Department of Economics, Pakistan Institute of Development Economics, Islamabad, Pakistan.
  • Ahmed, S. (2011). Does economic geography matter for Pakistan? a spatial exploratory analysis of income and education inequalities. The Pakistan Development Review, 929-952.
  • Aigner, D., Lovell, C. K., & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of econometrics, 6(1), 21-37.
  • Augurzky, B., & Schmitz, H. (2010). Effizienz von Krankenhäusern in Deutschland im Zeitvergleich: Endbericht-November 2010. Retrieved from
  • Banerjee, S., Carlin, B. P., & Gelfand, A. E. (2014). Hierarchical modeling and analysis for spatial data: Chapman and Hall/CRC.
  • Battese, G. E., & Corra, G. S. (1977). Estimation of a production frontier model: with application to the pastoral zone of Eastern Australia. Australian Journal of Agricultural and Resource Economics, 21(3), 169-179.
  • Berta, P., Martini, G., Moscone, F., & Vittadini, G. (2016). The association between asymmetric information, hospital competition and quality of healthcare: evidence from Italy. Journal of the Royal Statistical Society: Series A (Statistics in Society), 179(4), 907-926.
  • Boles, J. N. (1966). Efficiency squared--Efficient computation of efficiency indexes. Paper presented at the Proceedings of the Annual Meeting (Western Farm Economics Association).
  • Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2(6), 429-444.
  • Chilingerian, J. A., & Sherman, H. D. (1997). DEA and primary care physician report cards: Deriving preferred practice cones from managed care service concepts and operating strategies. Annals of operations Research, 73, 35-66.
  • Colla, C., Bynum, J., Austin, A., & Skinner, J. (2016). Hospital competition, quality, and expenditures in the us medicare population. Retrieved from
  • Committee, O. C. (2012). Policy Roundtables: Competition in the Provision of Hospital Services: Paris: Organisation for Economic Co-operation and Development.
  • Färe, R., & Lovell, C. K. (1978). Measuring the technical efficiency of production. Journal of Economic theory, 19(1), 150-162.
  • Farrell, M. J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society. Series A (General), 120(3), 253-290.
  • Felder, S., & Tauchmann, H. (2009). Regional Differences in the Efficiency of Health Production: an Artefact of Spatial Dependence?
  • Felder, S., & Tauchmann, H. (2013). Federal state differentials in the efficiency of health production in Germany: an artifact of spatial dependence? The European journal of health economics, 14(1), 21-39.
  • Gaynor, M., Propper, C., & Seiler, S. (2016). Free to choose? Reform, choice, and consideration sets in the English National Health Service. American Economic Review, 106(11), 3521-3557.
  • Giancotti, M., Guglielmo, A., & Mauro, M. (2017). Efficiency and optimal size of hospitals: Results of a systematic search. PloS one, 12(3), e0174533.
  • Gravelle, H., Santos, R., & Siciliani, L. (2014). Does a hospital's quality depend on the quality of other hospitals? A spatial econometrics approach. Regional science and urban economics, 49, 203- 216.
  • Herwartz, H., & Strumann, C. (2012). On the effect of prospective payment on local hospital competition in Germany. Health care management science, 15(1), 48-62.
  • Jamal, H. (2016). Spatial disparities in socioeconomic development: the case of Pakistan. Pakistan Development Review, 55(4), 421-436.
  • Kristensen, T., Olsen, K. R., Kilsmark, J., & Pedersen, K. M. (2008). Economies of scale and optimal size of hospitals: Empirical results for Danish public hospitals: Syddansk Universitet.
  • Lisi, D., Moscone, F., Tosetti, E., & Vinciotti, V. (2017). Hospital interdependence in a competitive institutional environment: Evidence from Italy. Retrieved from
  • Longo, F., Siciliani, L., Gravelle, H., & Santos, R. (2017). Do Hospitals Respond To Neighbours' Quality And Efficiency? A Spatial Econometrics Approach. Health Economics
  • Longo, F., Siciliani, L., Moscelli, G., & Gravelle, H. (2017). Does hospital competition improve efficiency? The effect of the patient choice reform in England. Retrieved from
  • Measurement, P. S. a. L. S. (2012-13). PSLM.
  • Meeusen, W., & van Den Broeck, J. (1977). Efficiency estimation from Cobb-Douglas production functions with composed error. International economic review, 435-444.
  • Mukamel, D. B., Zwanziger, J., & Bamezai, A. (2002). Hospital competition, resource allocation and quality of care. BMC Health Services Research, 2(1), 10.
  • O'Neill, L., Rauner, M., Heidenberger, K., & Kraus, M. (2008). A cross-national comparison and taxonomy of DEA-based hospital efficiency studies. Socio-Economic Planning Sciences, 42(3), 158-189.
  • Propper, C., Burgess, S., & Green, K. (2004). Does competition between hospitals improve the quality of care?: Hospital death rates and the NHS internal market. Journal of Public Economics, 88(7- 8), 1247-1272.
  • PSLM. (2011-12). Pakistan Social And Living Standards Measurement Survey
  • Valdmanis, V. G., Rosko, M. D., & Mutter, R. L. (2008). Hospital quality, efficiency, and input slack differentials. Health services research, 43(5p2), 1830-1848.

Cite this article

    CHICAGO : Bashir, Saima. 2020. "Exploring the Spatial Interdependence in Efficiency of Private Hospitals in Pakistan." Global Social Sciences Review, V (I): 21-35 doi: 10.31703/gssr.2020(V-I).03
    HARVARD : BASHIR, S. 2020. Exploring the Spatial Interdependence in Efficiency of Private Hospitals in Pakistan. Global Social Sciences Review, V, 21-35.
    MHRA : Bashir, Saima. 2020. "Exploring the Spatial Interdependence in Efficiency of Private Hospitals in Pakistan." Global Social Sciences Review, V: 21-35
    MLA : Bashir, Saima. "Exploring the Spatial Interdependence in Efficiency of Private Hospitals in Pakistan." Global Social Sciences Review, V.I (2020): 21-35 Print.
    OXFORD : Bashir, Saima (2020), "Exploring the Spatial Interdependence in Efficiency of Private Hospitals in Pakistan", Global Social Sciences Review, V (I), 21-35
    TURABIAN : Bashir, Saima. "Exploring the Spatial Interdependence in Efficiency of Private Hospitals in Pakistan." Global Social Sciences Review V, no. I (2020): 21-35. https://doi.org/10.31703/gssr.2020(V-I).03