Efficiency and financial solidity of healthcare service provider institutions (IPS) in Colombia

Borradores de Economia
Number: 
1248
DOI: 
https://doi.org/10.32468/be.1248
Published: 
Authors:
Carolina Crispin-Forye,
Ligia Alba Melo-Becerraa,
Diego Alexander Restrepo-Tobóne,
Diego Vásquez-Escobara
Classification JEL: 
D24, I12, L25
Keywords: 
Technical efficiency, Input-oriented distance functions, stochastic frontier, IPS, Colombia (11178)
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Abstract

This study evaluates the technical efficiency of the Health Service Provider Institutions (IPS) in Colombia, between 2017 and 2021. We use a stochastic frontier approach to estimate an input-oriented distance function to account for the multi-product nature of the IPS. After controlling for entity size, participation in high-cost disease care, and administrative capacity, the findings reveal an average technical efficiency of 75% with no efficiency gains during the analyzed period. Additionally, using the CAMEL methodology, an analysis of IPS financial soundness is conducted, evaluating its relationship with efficiency outcomes of the entities. The results identify a positive association between IPS efficiency and profitability and liquidity indicators, suggesting that institutions with greater financial stability and better resource management exhibit higher levels of efficiency.