Efficiency and Total Factor Productivity in Japanese Public Hospitals: An empirical analysis

         
Author Name ISHIKAWA Takayuki (Kanagawa University) / INUI Tomohiko (Faculty Fellow, RIETI)
Creation Date/NO. September 2026 26-J-036
Research Project Supply Chain Management and Productivity (Previous tilte: Supply Chain Management and Economic Social Security: Analyses from the viewpoint of productivity and human capital)
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Abstract

This study empirically analyzes the determinants of productivity in Japanese public hospitals by measuring technical efficiency and total factor productivity (TFP). Using a 17-year panel dataset from 2007 to 2023, we first estimate technical efficiency via Stochastic Frontier Analysis before estimating TFP. The findings reveal three main points. First, improved technical efficiency contributes to higher TFP. While a competitive environment enhances efficiency. Reliance on subsidies tends to reduce it. Second, research and development (R&D) investments positively affect TFP. Third, there is an inverted U-shaped relationship between the age of medical staff and TFP, indicating that an aging workforce negatively impacts organizational productivity. These results suggest that improving hospital productivity requires not only management efficiency and a competitive environment but also strengthening the medical technology base through continuous R&D and a balanced age distribution among medical professionals.