Abstract. Stochastic Frontier Analysis was used to estimate the technical efficiency of specialist surgeon practices based in Gauteng Province, South Africa. The analysis was conducted for both single and multiple output production functions, while efficiency was allowed to depend upon surgeon and practice characteristics. Multiple output models, due to an increase in the number of observations, can be more more precisely estimated, and, since there are multiple observations per surgeon, can be estimated with fixed effects. The results of the analyses suggest that efficiency averages around 50% for this sample, and is convex in years of surgical experience. The benefit of multiple output analysis -improved precision -obtains, while surgeon level fixed effects alleviate some concerns related to unobserved heterogeneity.

A purposive sample of South African specialist doctors provided data for an empirical analysis of revenues, costs and earnings associated with specialist surgical medicine. The empirical analysis includes both parametric and nonparametric regression. Parametric estimates of revenues per new patient range between R689 to R818, while cost per new patient estimates range between R694 and R749; average surgeon income per new patient falls within a similar range. Furthermore, costs per surgery follow a cubic specification, implying increasing marginal costs at the practice level. Returns to experience are estimated to be quadratic, although imprecisely so, given limited observations. Due to the low response rate in the survey, there is a need to conduct further research into this topic, to provide better information to both specialists and the South African Department of Health, which sets pay packages for public sector health workers.