ABSTRACT
"The general practice in technical efficiency measurement for health providers has been to ignore additional products of most transformation processes that can be classified as ""undesirable outputs which are a subset of the output set. Traditional Data Envelopment Analysis (DEA) technique is modified to give a more realistic and comprehensive score of production efficiency considering both;desirable and undesirable outputs.This is applied to a sample of Uganda's district referral hospitalsover the 1999-2003 period. The modified DEA credits a hospital for its production of desirable outputs but penalizes it for its production of undesirable outputs (patient deaths). Without the inclusion of these factors; the efficiency evaluation becomes a purely technical measure of the system alone; and does not account for the interaction of the system with the surrounding environment. In addition; there are also technological dependencies arising due to the relationships between the desirable and the undesirable outputs."