Evaluation of the technical efficiency of Latvia’s municipal long-term care centres for the eldery

As a result of societyís ageing and changes in the demographic situation, the demand for long-term social care services at budget institutions is growing in Latvia, which also increases the spending of financial resources by the local governments. Given such circumstances, efficient economic processes within these institutions would allow for rational use of resources available to local governments. Within the framework of this paper, the authors compare the technical efficiency of long-term care centres (LTCC) for the elderly in 64 Latviaís municipalities, based on the results of the evaluation of the relative efficiency of each LTCC. The results were obtained by using the data envelopment analysis (DEA) method, where LTCCs are treated asdecisionmaking units (DMUs). The objective of the study is to identify the technically most efficient DMU (ME DMU) within the distribution of different DMUs, by determining the technically ME DMUs in terms of human resources, costs, and remuneration, as well as to find out the inputs that affect the efficiency of less efficient DMUs and the necessary changes for these inputs to achieve ME DMU status. Achieving the goal included a literature analysis on the related topic, data selection and the adjustment thereof according to the objectives of the study, application of a cluster analysis, DEA and sensitivity analysis, followed by the analysis of results. By using the selected methods to achieve the objective, one technically ME DMU was identified in terms of labour, costs, and remuneration in the cluster distribution, and the input that reduces technical efficiency of DMU was identified. The reduction of this input within DEA can raise efficiency ratio (ER) of less efficient DMUs to reach ME DMU. The authors conclude that in terms of identified workforce, costs, and remuneration, technically ME DMUs, based on input/output, can serve as a benchmark for lower efficiency DMUs of similar size in order to increase their technical efficiency. In turn, within the framework of sensitivity analysis the reduction of input that has been identified to affect DMU efficiency, which contributes to the increase in ER, can be applied to all lower efficiency DMUs based on the high proportion of this input relative to other DEA model inputs. The novelty of the study is the assessment of the technical efficiency of the LTCC for the elderly, by using the administrative data of the area, as well as the data analysis approach within the scope of the selected method, which has not been conducted in the area of social care in Latvia so far