EVALUATING THE TECHNICAL EFFICIENCY OF MALAYSIAN PUBLIC HOSPITALS UNDER THE CLUSTER HOSPITAL INITIATIVE USING DEA: A QUASI-EXPERIMENTAL STUDY

Abstract

Healthcare resource scarcity is a global challenge, and the Malaysian healthcare sector faces similar issues, including overutilization of state hospitals, underutilization of district hospitals, and a shortage of healthcare workers. To address these challenges, the Cluster Hospital Initiative (CHI) was introduced in Malaysian public hospitals to enhance resource sharing among geographically proximate hospitals and optimize healthcare service delivery. This study evaluates and compares the technical efficiency of CHI and non-CHI public hospitals in Peninsular Malaysia before and after CHI implementation. A quasi-experimental study was conducted across 36 public district hospitals in Peninsular Malaysia using retrospective data from 2011 to 2020, provided by the Ministry of Health. Data Envelopment Analysis (DEA) was applied to evaluate technical efficiency under both constant returns to scale (CRS) and variable returns to scale (VRS) models. The Window Analysis Framework was employed to compare efficiency across decision-making units (DMUs) over different implementation phases, during the pre- and post-intervention periods. Between the pre-initiative and post-initiative periods, the technical efficiency of the intervention group (CHI hospitals) improved overall with mean TE under the CRS model increasing from 0.951 to 0.987, and under the VRS model from 0.977 to 0.994. In comparison, the control group showed smaller improvements (CRS: 0.950 to 0.966, VRS: 0.959 to 0.976). Scale efficiency (SE), reflecting improvements in operating at an optimal size, emerged as the primary driver of these gains in the intervention group, with a 2% increase in SE post-initiative. Paired t-tests revealed statistically significant improvements (p < 0.05) in mean efficiency scores between the pre- and post-initiative periods within both the intervention and control groups. The Cluster Hospital Initiative (CHI) in Malaysian public hospitals shows strong potential to enhance technical efficiency by optimizing resource allocation, redistributing services, and improving operational effectiveness. Scaling up CHI could strengthen public district hospitals and support a more equitable, efficient, and sustainable healthcare system. Future research should assess its long-term impact, identify key success factors, incorporate DEA and ROI in performance monitoring, and emphasize knowledge translation to guide policy and stakeholder engagement