Productivity growth in Chinese medical institutions during 2009-2018

Abstract

China is the most populous nation and considerations of economic eciency in the social sectors is important for maintaining the wellbeing of such a large population. This is especially true when gauging the performance of the healthcare sector treating the population. In this paper, we examine the total factor productivity (TFP) growth in Chinese medical institutions during the period 2009-2018, which experienced a systemic healthcare reform. In order to identify the contribution from each component of TFP indicators and from each provincial or regional medical institutions, a generalized decomposition of productivity gains is applied to analyze hospital operations based on an aggregate directional distance function (DDF). The results show that the annual average TFP growth rate in Chinese medical institutions is 1.87% that is mainly driven by technological progress (0.75%, per annum), while less contributed by technical eciency change (0.65%, p.a.) and scale eciency change (0.47%, p.a.). Disparities of provincial hospital performances are observed that may provide policy implications for decision makers.