Association between out-of-city hospitalization and public hospital efficiency: a panel study from Guangdong, China

Abstract Background Out-of-city hospitalization reshapes regional healthcare demand and may affect the operational efficiency of public hospitals. Empirical evidence on this relationship in China remains limited. This study examines the association between out-of-city hospitalization rate and public hospital efficiency in Guangdong Province. Methods Using balanced panel data from 21 prefecture-level cities (2018–2023), hospital efficiency was measured with a slacks-based measure of efficiency (SBM) model in data envelopment analysis (DEA). The key explanatory variable was the out-of-city hospitalization rate, defined as the share of inpatient care received outside patients’ home cities. Two-way fixed effects models estimated the association, with additional analyses exploring pure technical efficiency, scale efficiency, and heterogeneity across cities with different levels of healthcare resource endowment. Results Higher out-of-city hospitalization rates were significantly associated with lower public hospital efficiency (β = -2.492, p < 0.05), with the association more pronounced for pure technical efficiency (β = -3.322, p < 0.01) than for scale efficiency. The negative association was weaker in cities with relatively abundant healthcare resources. Conclusions The negative association between out-of-city hospitalization and public hospital efficiency is more pronounced for pure technical efficiency than for scale efficiency. Strengthening regional healthcare coordination, enhancing local service capacity, and aligning non-local reimbursement policies with tiered healthcare objectives may help improve efficiency.