SENSITIVITY ANALYSIS FOR DEA MODELS - AN EMPIRICAL EXAMPLE USING PUBLIC VS NFP HOSPITALS

The research presented here applies the Data Envelopment Analysis (DEA) to a sample of public (government-owned) and not-for-profit hospitals operating in Michigan in 1982. The focus of this research is twofold. First, assessing the relative efficiency between these two ownership types using the DEA rather than cost or profit functions can add insights into the production practices of these two ownership forms of hospitals. Second, testing the sensitivity of the DEA will add credence to this approach and resulting measures. Ten different specifications of the DEA are employed to test the sensitivity of the model.