Journal article

An Examination of Public Hospital Productivity and its Persistence: An Index Number Approach

CC Cheng, A Scott, V Sundararajan, W Yan, J Yong

The Australian Economic Review | Wiley | Published : 2020


This paper measures the level and growth of total factor productivity (TFP) of public hospitals in Victoria, Australia, using an index number approach. We further examine the persistence of productivity over time, and the extent to which productivity varies with hospital characteristics such as hospital size. Hospital administrative data from Victoria from 2007–08 to 2011–12 are used. We find substantial variation in TFP across hospitals: large hospitals perform significantly better than small hospitals, both in TFP level and growth. Productivity level is highly persistent over time, but not productivity growth.


Awarded by NHMRC Partnership Grant

Funding Acknowledgements

Cheng: Department of Health and Human Services, Victoria, Australia; Scott, Yan and Yong: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Parkville Victoria, Australia; Sundararajan: School of Psychology and Public Health, La Trobe University, Bundoora, Victoria, Australia. Corresponding author: Yong, email <>.This research was funded by an NHMRC Partnership Grant (Grant ID: 567217) and in collaboration with the Victorian Department of Health and Human Services (formerly the Victorian Department of Health). The views expressed herein are those of the authors and do not reflect the views of the Victorian Department of Health and Human Services.