Trends in Department of Defense hospital efficiency

This study employs a simple cross sectional design using longitudinal data to explore the underlying factors associated with differences in hospital technical efficiency using data envelopment analysis (DEA) in the Department of Defense (DOD) sector across three service components, the Army, Air Force and Navy. The results suggest that the services do not differ significantly in hospital efficiency. Nor does hospital efficiency appear to differ over time. With respect to the efficient use of input resources, the services experienced a general decline in excessive usage of various inputs over the three years. Analysis of the returns to scale captures opportunities for planners of changing the relative mix of output to input slacks for increasing a hospital's efficiency. That is, policy makers would get more immediate “bang per buck” with emphasis on improving the efficiencies of hospitals with higher returns to scale than other hospitals. Findings also suggest a significant degree of comparability between the DEA measure and these measures often used to indicate efficiency.

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