| Summary: | Inefficiency is commonplace, yet
exercises aimed at improving provider performance efforts to
date to measure inefficiency and use it in benchmarking
exercises have not been altogether satisfactory. This paper
proposes a new approach that blends the themes of Data
Envelopment Analysis and the Stochastic Frontier Approach to
measure overall efficiency. The hybrid approach
nonparametrically estimates inefficiency by comparing actual
performance with comparable real-life "best
practice" on the frontier and could be useful in
exercises aimed at improving provider performance. Four
applications in the education and health sectors are used to
illustrate the features and strengths of this hybrid approach.
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