Ann Oper Res (2006) 145:281–299 DOI 10.1007/s10479-006-0035-6 Efﬁciency and total quality management in health care organizations: A dynamic frontier approach ∗ Diego Prior Published online: 6 July 2006 C  Springer Science + Business Media, LLC 2006 Abstract This paper analyses hospital performance using Data Envelopment Analysis (DEA) and the Malmquist productivity index. We follow two approaches to quantify move- ments in productivity: (1) the traditional approach that only considers output and input variables; and (2) a more comprehensive approach that incorporates movements in quality and restricts some achievements, if quality is reduced. On the premise that the indicator for quality (nosocomial infections) is equivalent to a bad output, we explore the characteristics of, and compare the results of, the different technological ways to incorporate quality (good or bad attributes, strong or weak disposability technological assumptions). After discussing the virtues and limitations of the existing possibilities, the paper presents a better formula- tion that allows the preservation of TQM postulates. The decomposition in the Malmquist productivity index shows an improvement in productivity and a positive technical change, especially when quality is introduced. Keywords Data Envelopment Analysis . Malmquist productivity index . Hospitals . Quality Introduction This paper focuses on the evaluation of efﬁciency and quality in a sample of Spanish hos- pitals. More speciﬁcally, the focus is on hospitals working within the public health care network in Catalonia, North-East of Spain. Taking into account the concerns expressed in the literature (see, for instance Rouse, 1997), we decided to follow an evaluation oriented towards effectiveness, so that efﬁciency and quality jointly establish the level of effectiveness obtained. ∗ This paper forms part of a more extensive research work, ﬁnanced by the Spanish Science and Technology Ministry (ref. SEC2003-047707). D. Prior () Department of Business Economics, Universitat Autonoma de Barcelona, 08193 Bellaterra, Barcelona, Spain e-mail: diego.prior@uab.es Springer