In this study, we measured and analyzed the production efficiency of nursing homes in Taiwan. The modified DEA (data envelopment analysis) technique was used in order to avoid the “censoring problem” caused by the traditional DEA method. We were able to investigate the impact of the performance of individual decision-making units on the estimated production frontier. We also identified the trade-off between quantity and quality outputs through comparing the efficiency measurements of different indexes. The non-parametric U test was used to verify these differences and the regression analysis to isolate possible contributing factors of the estimation results.