Measuring the impact of Total Quality Management (TQM) on efficiency using data envelopment analysis (DEA) in the hospital industry: The case of the East South Central region of the United States

The current hospital business environment has been characterized by cost control within a hospital and increasing competition among hospitals. In response to these environmental pressures, hospitals have become more conscious about efficiency in their operation, while having to improve quality of services.; The primary objective of our study is to investigate the impact of quality improvement practices on efficiency in hospitals. We apply Data Envelopment Analysis (DEA) and employ a questionnaire survey. Hospital characteristics, such as ownership, location and size, are the control variables of the analysis. A factorial design is developed to test the association between quality and efficiency. We analyze 97 general medical and surgical hospitals operated in the East South Central region of United States. The extent of TQM implementation is assessed from the view point of top management in the hospital. The DEA model to evaluate the relative efficiency of hospitals is the BCC input orientation with nondiscretionary variables.; The findings of study indicate that (1) TQM is widespread in the hospital industry, (2) effective implementation of quality programs increases the hospital's operational efficiency across hospital characteristics, and (3) DEA is a useful tool to monitor quality improvement practices in a hospital setting.