The first term is equal to the Farell technical efficiency measure at period t divided by the Farell technical efficiency measure at period t+1 and therefore reflects the efficiency change component in productivity change. In other words, the term indicates whether the hospital has moved closer to the CRS-frontier (i.e. catching-up to the frontier). The second term is equal to the geometric mean of the shifts in the CRS technology observed at the production bundles (xt, yt) and xt+1, yt+1 respectively and therefore reflects the technological change component in productivity change (i.e. shift in the frontier).