K. Deep et al. (Eds.): Proceedings of the International Conference on SocProS 2011, AISC 130, pp. 657–666. springerlink.com © Springer India 2012 Technical and Relative Efficiency Assessment of Some Private Sector Hospitals in India Sandeep Kumar Mogha 1 , Shiv Prasad Yadav 1 , and S.P. Singh 2 1 Department of Mathematics, Indian Institute of Technology, Roorkee, Roorkee-247667, India moghadma@gmail.com 2 Department of Humanites and Social Sciences, Indian Institute of Technology, Roorkee, Roorkee-247667, India {yadavfma,singhfhs}@iitr.ernet.in Abstract. This paper measures technical and relative efficiencies of some private sector hospitals in India. The study makes an attempt to provide an overview of the general status of the hospitals. Data Envelopment Analysis (DEA)-CCR and BCC models have been applied for the Input-output data collected from 15 hospitals for the year 2009-2010. The study found that out of 15 hospitals, 2 hospitals are technically efficient and 8 hospitals are pure technically efficient. Assessment of technical efficiency concludes that the performance of hospitals is good but still very far from the optimal level. On average, a technical inefficient hospital may reach on the efficiency frontier if it is able to increase its output by 30.20%. The mean value of OTE (60.80%) indicates that on average a hospital to be efficient has to produce 39.20% more output with the same level of inputs. Keywords: DEA, Efficiency and Hospitals. 1 Introduction Over the last 5 decades India has built a sound healthcare infrastructure at primary, secondary and tertiary levels in both the public and the private sectors. However, during the last decade, role of the public sector in the healthcare services has been shrinking and that of private sector has been expanding. Inadequate infrastructure, non-availability of competent doctors and paramedical staff, poor maintenance, lack of motivation among the staff, and insufficient supply of drugs and medicines are the major problems with the public sector healthcare institutions. The policy of structural adjustment programs and liberalization being initiated by the Government of India since 1991 has also affected the public sector health services, which is evident from the fact that public sector expenditure on health in India has decelerated from 1.3% of GDP in 1990 to 0.9% in 1999 [9]. In 2001, the target was to increase the spending from 0.9 % to at least 2 % of the GDP on healthcare.