The Challenge of Corporatisation: the Experience of Portuguese Public Hospitals

The inability of traditional state organisations to respond to new economic, technological and social challenges and the associated emerging problems has made it necessary to adopt new methods of health management. As a result, new directions have emerged in the reform of Public Administration together with the introduction of innovative models. The aim is to achieve a type of management that focuses on results as well as on effort and efficiency. We intend to analyse to what extent the adoption of business management models by hospital healthcare units can improve their performance, mainly in terms of standards of efficiency. Data envelopment analysis (DEA) was used to investigate the efficiency of a set of public Portuguese hospitals. The aim was to evaluate the impact of business management in Portuguese public hospitals with regards to efficiency, specifically taking into account the fact that lack of resources and increased health care needs are a present and future reality. From a total of 83 public hospitals, a sample of 59 hospitals was chosen, of which 21 are state-owned hospital enterprises (SA) and 38 are traditional public administration sector hospitals (SPA). This study evaluates hospital performance by calculating two efficiency measures associated with two categories of inputs. The first efficiency measures the costs associated with hospital production lines and the number of beds (representing fixed capacity) as inputs. The annual costs generated by the hospitals in the consumption of capital and work (direct and indirect costs) are used. A second measure of efficiency is calculated separately. This measure includes in the inputs the number of beds as well as the human resources available (number of doctors, number of nurses and other personnel) in each hospital. With regard to output, the variables that best reflect the hospital services rendered were considered: number of inpatient days, patients discharged, outpatient visits, emergencies services, sessions in hospital day care services and the number of surgeries. The results seem to suggest that the introduction of market processes and changes in organisational structure--such as managerial autonomy and corporatisation of public hospitals--have had a positive impact on Portuguese public hospitals. This positive evolution was particularly evident in SA hospitals, but further studies are needed to confirm these preliminary results.