Does Competition Increase Economic Efficiency in Swedish County Councils?

As such, the following presentation of the results will focus on the second model where the
outlier effect of Norrbotten has been controlled for.

Table 3 about here.

The results show that the parameter estimates for the local county council features ALTER,
REGION and QUALITY are all positive and statistically significant at the 5 percent level.
Note, however, that QUALITY is measured as the 28-day mortality rate after suffering a
stroke in the different county councils. As such, a positive parameter estimate indicates that
there is a positive correlation between efficiency and mortality.

Turning to the demographic and case mix variables, the parameter estimate for POPDENS is
negative and statistically significant at the 5 percent level, while the estimate for OLD is
negative and statistically significant at the 10 percent level. The results also show a negative
and statistically significant correlation between efficiency and the amount of patients under
psychiatric care.

Finally, the TREND variable and the indicator variable relating to non-socialist county
councils, NON-SOCIALIST, are both negative and statistically significant at the 5 percent
level.

4. Discussion

As mentioned in the introduction, there are at least four ways that a larger proportion of health
care performed by alternative producers could increase economic efficiency in local county
councils, financial rewards, diseconomies of scale, X-inefficiency and specialisation. As such,
the purpose of this paper has been to study if local county councils who has a large proportion
of health care performed by alternative producers are more economically efficient than other
county councils. Following Borden (1988), Bedard and Wen (1990) and Gerdtham et al
(1999), the analysis in this paper was performed in two steps. First, economic efficiency was
estimated using data envelopment analysis (DEA) and, second, the efficiency scores were
used as the dependent variable in regression models trying to explain economic efficiency of
different production facilities or different county councils.

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