ABSTRACT
<p><b>BACKGROUND</b>Taiwan has implemented a National Health Insurance (NHI) program to provide uniform comprehensive coverage since 1995. Forced by the severe financial deficit, global budgeting is introduced to replace the original payment system in Taiwan's NHI. Under global budgeting system, the total budget is distributed to six geographical regions in Taiwan. There is no pre-determined budget for each hospital. In order to investigate the longitudinal trend of how global budgeting influences health care resource, it is essential to estimate the efficiency of resource allocation in Taiwan's NHI.</p><p><b>METHODS</b>Data Envelopment Analysis (DEA) and Malmquist index (MI) are used to investigate the 8-year panel data of 23 cities and counties which was collected from the annual report from the Department of Health, Taiwan, China. A value of MI greater than 1 indicates that total factor productivity progress has occurred, while a value of MI less than 1 indicates productivity loss.</p><p><b>RESULTS</b>As a result, 37 of the 184 DMUs in the analysis were found to be relatively efficient during the period, in which 14 of 23 DMUs are efficient in 2002 right after adopting globe budgeting. A trend of MI declines between 2002 and 2009 implies the volume of health care services decrease after adopting global budgeting system. Production efficiency has been improved after global budgeting implies that behaviors of health providers control cost and avoid wasting resource at macro level.</p><p><b>CONCLUSIONS</b>The regressive MI indicates the hospitals redistribute health care resource to eliminate unnecessary treatment and to control the growth of service volume under global budgeting system. Hence, a trend of declining MI focuses on health care resource redistribution rather than efficiency improvement in this study.</p>
