Changes in Hospital Efficiency under the Implementation of the National Health Insurance

The efficiency changes of 111 teaching
hospitals from 1993 to 1996 are analyzed
through two-person ratio efficiency games
and modified Malmquist productivity index.
The results show that the implementation of
NHI impacts the productivity of Taiwan’s
teaching hospitals. The productivity of
teaching hospitals significantly declined in
1995, the year of NHI’s implementation.
This is mainly due to the regress of efficient
frontier. Although the relative efficiencies
of teaching hospitals improved in 1996, the
regress of efficient frontier neutralized these
improvements. The productivity thus had
no significant change. Besides, the changes
in productivity for hospitals with different
accreditation levels also differ. Whereas
medical centers were less influenced during
the study period, regional and district
teaching hospitals lost their productivity in
1995 because of the decline of technical
efficiency.