TECHNICAL, SCALE, AND SIZE EFFICIENCY IN NURSING-HOME CARE - A NONPARAMETRIC ANALYSIS OF CONNECTICUT HOMES

Maindiratta (1990) questioned the usefulness of the concept of scale e fficiency in production as the most productive scale size (MPSS) usual ly requires altering the scale of output produced. If the decision mak ing unit (DMU) is required to deliver a specific output bundle, then a ltering output along with the input scale to reach the MPSS is not a v alid recommendation. He proposed a measure of the size efficiency of a DMU. In this paper, we apply Data Envelopment Analysis (DEA) to exami ne the levels of technical, scale, and size efficiency of individual n ursing homes providing health care to the elderly. The data used relat e to the operations of 140 nursing homes from Connecticut, USA during the year 1982-83. Maindiratta's model is input-oriented. By contrast, our study is output-oriented and we appropriately reformulate Maindira tta's model. The findings show that in several cases size efficiency i s less than unity. This suggests that the most efficient production of output would require restructuring of the nursing home under investig ation as more than one small unit. We also compare the efficiency leve ls of 'for-profit' homes with those of 'not-for-profit' homes.