Patterns of productivity changes in nursing homes by using Malmquist DEA index

Abstract

Motivation to open a for-profit nursing home is the same as motivation to start any other business, and it seems that, due to various demographic and social changes, the interest in this sector, especially in developed countries, will increase in the future. In that context, this research aims to analyze the efficiency of for-profit nursing homes with a focus on Croatian for-profit nursing homes from 2015 to 2019. In order to estimate different kinds of efficiencies, precisely to estimate technological change, which can’t be estimated through windows DEA, and technical efficiency changes, the Malmquist -- DEA performance measure was chosen for this analysis. The results show that for-profit nursing homes in our sample experienced an increase in the total factor productivity by 12.67 % in the analyzed period, where the decline in technical efficiency (-0.21 %) was compensated by an increase in technological change (13.16 %). Although technological innovation shifted the relative efficient frontier to a higher level, for-profit nursing homes in our sample were far from the best production frontier, highlighting managerial inefficiency.