Abstract
Policy makers continue to debate whether or not to increase the share of health care expenditures in United Kingdom. On the other hand, the pressure of operating within tight budgets and the advances in technology are forcing more locally based hospitals to close. One that could be used by policy makers as a benchmark is the measure of relative performance of hospitals. Many researchers have examined the source of inefficiency in health sectors (see, for example, Harris et al., Oper. Res. Soc. 57:801-811, 2000, Ozcan et al., Med. Case 30:781-784, 1992; Ozcan et aL., J. Med. Syst. 20(3)141-150, 1996; and Grosskopf and Valdmanis, J. Health. Econ. 6:89-107, 1987 but there is no evidence of measuring performance of neonatal care units of Scottish hospitals in the DEA literature. The purpose of this paper is to measure both technical and scale efficiency using data envelopment analysis in a selection of 22 neonatal care units in Scotland. The analysis suggests that major inefficiency likely exists in health care production in United Kingdom. There is potential for improving productivity by 20%.