Efficiency and Financing in Catering Primary Health Care to the Poors

Abstract

Public health care system is a crucial element of social welfare, particularly in underdeveloped areas where a majority of the populace lingers in abject poverty and deprivation. The system is typically assumed to be cheap and based on a public welfare perspective. However, it is argued that in the name of reform process, it is usually targeted as a soft option. Using a panel data of all the (reported) hospitals in the Indian state of West Bengal over the seven-year period, 1997–2003, we try to answer this question. The framework of input–output data is used in order to assess the performance of these hospitals. The non-parametric Data Envelopment Analysis (DEA) is used to assess the efficiency of these hospitals over these periods. The results do suggest initial adverse impact of the faulty reform process but indicate some later revival. Huge intra-state differences persist. Surprisingly, economically advanced regions are adjudged, too, more efficient than their less developed counterpart. Public expenditure also appeared to be positively correlated with efficiency. In fact, our study indicates that one of the most important factors in determining efficiency is per hospital real health expenditure.