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Technical efficiency of for‐profit and non‐profit nursing homes
Author(s) -
Fizel John L.,
Nunnikhoven Thomas S.
Publication year - 1992
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090130507
Subject(s) - profit (economics) , microeconomics , gross profit , for profit , business , economics , not for profit , nursing homes , industrial organization , classical economics , nursing , accounting , medicine
This paper employs data envelopment analysis to generate efficiency indices for individual nursing homes relative to a best‐practice frontier. Further analysis then shows that these ‘unadjusted’ indices represent factors other than efficiency. Regression analysis purges the indices of these confounding influences. The resulting ‘adjusted’ efficiency indices demonstrate that for‐profit homes have higher mean levels of efficiency and a more efficient production frontier than non‐profit homes. These results support the property rights hypothesis that forprofit homes are inherently more efficient than non‐profit ones.