Performance Evaluation of Private Hospitals under the Health Transformation Initiative in Türkiye

Aim This study examines the efficiency of Türkiye’s private healthcare sector, which has expanded significantly recent decades in parallel with global trends. Between 2002 and 2022, the number of private hospitals more than doubled, largely driven by the Health Transformation Program. Data and Methodology: We assess the technical efficiency of outpatient and inpatient care services provided by private hospitals in Türkiye through the application of stochastic frontier analysis (SFA). The unbalanced panel dataset includes 541 hospitals and covers the period from 2019 to 2023. The SFA models incorporate inputs such as the number of medical and non-medical personnel, the number of beds, and their interactions. Additionally, external factors—including the COVID-19 pandemic and the 2023 earthquake in southern Türkiye—are integrated into the models to evaluate their effects on the outputs of outpatient visits and inpatient discharges. Findings: The SFA results indicate that the average technical efficiencies of private hospitals were 46% for inpatient services and 60% for outpatient services. These results suggest a potential for improvement of 54% and 40%, respectively, through more efficient utilization of existing input bundles under current technological conditions. The efficiency averages show no significant variation across years, regions, hospital types, or sizes. The analysis further reveals that healthcare personnel play a critical role in the efficient delivery of healthcare services. Nurses, along with other medical and non-medical staff, appear to function as potential substitutes within private hospitals. Outpatient efficiency declined sharply in 2020, the adverse impact of the pandemic lessened in 2021. In contrast, inpatient services remained largely unaffected by COVID-19. The 2023 earthquake, however, substantially decreased efficiency across both service types, with outpatient care being most severely impacted. Finally, the production functions for both inpatient and outpatient services exhibit diminishing returns to scale, indicating that hospital expansion may outpace managerial capacity. Conclusion The findings offer valuable insights to both private sector managers and healthcare policy makers, supporting more informed decision-making and strategic planning in shaping the hospital sector.