The application of data envelopment analysis for performance measurement of the UK National Health Service estate portfolio

The UK National Health Service (NHS) estate is one of the most complex property portfolios in Europe. As required by UK law, NHS trusts are required to provide information on estate operational costs; this is used to construct a tranche of key performance indicators (KPI's). These are characterised by a cluster of performance indicators (PI's) that are relevant to a particular KPI theme. This provides basic benchmark data for NHS Trusts, but it does not truly reflect the efficiency of the capital invested since this is not mapped against any specific outputs (functions). This paper proposes an alternative approach to measuring the performance of the estate through the use of Data Envelopment Analysis techniques (DEA). Operational and maintenance cost data from 15 NHS acute teaching trusts outside of London is used in the study and mapped against 2 outputs (in-patient days and occupied beds per available beds) in order to determine how effectively each NHS Trust translates its input resources into outputs. The generate efficiency improvement scores, which reveal that the standard deviation of average efficiency in the cluster was 22.38, thus revealing a significant variance in performance. The efficiency values range between 100 and 33.6%. The results provide useful information on the technical efficiency of building assets and allow NHS Trusts to identify where efficiency improvements are necessary within a continuous efficiency analysis framework.