Stochastic frontier analysis of specialist surgeon clinics

Abstract

Stochastic frontier analysis was used to estimate the technical efficiency of specialist surgeon practices based in Gauteng Province, South Africa. The analysis was conducted for both single and multiple output production functions, while efficiency was allowed to depend upon surgeon and practice characteristics.Multiple output models, due to an increase in the number of observations, can be more precisely estimated and, as there are multiple observations per surgeon, can be estimated with fixed effects. The results of the analyses suggest that efficiency averages around 50% for this sample and is convex in years of surgical experience. The benefit of multiple output analysis – improved precision – obtains, while surgeon-level fixed effects alleviate some concerns related to unobserved heterogeneity.