Intra- and inter-group composite indicators using the BoD model

Abstract

We extent the radial DEA model with a single constant input, often referred to as the Benefit-of-the-Doubt (BoD) model, to account for environmental or contextual differences, defined to be the gap between the pooled and group frontiers and then we develop theoretically consistent aggregation rules to compute intra- and inter-group composite indicators. We verify that the simple arithmetic average remains the theoretically consistent aggregate for pooled and intra-group composite indicators and we develop a theoretically consistent aggregation scheme for the inter-group composite indicators. We applied the proposed methodology to analyze financial performance of public and private hospitals in Greece by means of financial ratios referring to their liquidity performance and to examine the extent of differences in the inter-group composite indicators between the two types of ownership both at the individual and the aggregate level.