Decomposition of Total Factor Productivity Growth in Referral Hospitals in Kenya: 2012-2016

Abstract

In Kenya, health provision faces challenges of high poverty levels, high HIV-AIDS, malaria prevalence and poor road infrastructure. Using data from 14 county referral hospitals for the period 2012-2016, this study decomposed the DEA output-oriented Multi-factor Productivity Index (MPI) to identify the causes of productivity growth in Kenya’s health sector. The findings show the mean MPI growth for the period was 2.69%, which is driven by a technical change of 3.19%, but dampened by a decline in technical efficiency change of 0.18%, scale efficiency change of 0.07% and pure technological change of 0.15%; with the technical change being scale-augmenting. The study finds RTS to be greater than STC, with both being less than one. Thus, hospitals could enhance productivity by adjusting their scales towards technological optimal scale size (TOPS), and addressing management challenges that debilitate the synergy between technology and human resource capacity.