New Public Management and hospital efficiency: the case of Norwegian public hospital trusts

Abstract

New Public Management-inspired reforms in the Norwegian hospital sector have introduced several features from the private sector into a predominantly public healthcare system. Since the late 1990s, several reforms have been carried out with the intention of improving the utilization of resources. There is, however, limited knowledge about the long-term, and sector-wide effects of these reforms. In this study, using a panel data set of all public hospital trusts spanning nine years, we provide an analysis of the efficiency of hospital trusts using data envelopment analysis (DEA), as well as a Malmquist productivity index. Thereafter we use the efficiency scores as the dependent variable in a second-stage panel data regression analysis. We show that during the period between 2011 and 2019, on average, efficiency has increased over time. Further, in the second-stage analysis, we show that New Public Management features related to incentivization are associated with the level of hospital efficiency. We find no association between degree of competition and efficiency.