In this study, we evaluated changes inefficiency in the medical service industry of Taiwan at the level of decision-making units as well as at the industry level. The efficiency, technology, and total factor productivity of the National Health insurance system has changed considerably since it was first developed in 1995. We employed the data envelopment analysis (DEA) and Malmquist index methodology using two input and two output indicators in assessing the total factor productivity of22 counties/cities over the period 2005~2014. Decomposing the Malmquist index into “catch-up” and “frontier shift” components revealed a decrease in the quality of care during the study period.
JEL classification numbers: I13, I18, O32
Keywords: data envelopment analysis, Malmquist index, medical service industry, total factor productivity.