Abstract

Efficiency is one of the central preoccupations of health policy-makers and managers, and justifiably so. Inefficient care can lead to unnecessarily poor outcomes for patients, either in terms of their health, or in their experience of the health system. What is more, inefficiency anywhere in the system is likely to deny health improvement to patients who might have been treated if resources had been used better. Improving efficiency is therefore a compelling policy goal, especially in systems facing serious resource constraints.

The desire for greater efficiency motivates a great deal of decision-making, but the routine use of efficiency metrics to guide decisions is severely lacking.

To improve efficiency in the health system we must first be able to measure it and must therefore ensure that our metrics are relevant and useful for policy-makers and managers. In this book the authors explore the state of the art on efficiency measurement in health systems and international experts offer insights into the pitfalls and potential associated with various measurement techniques.

The authors show that

• The core idea of efficiency is easy to understand in principle - maximizing valued outputs relative to inputs, but is often difficult to make operational in real-life situations
• There have been numerous advances in data collection and availability, as well as innovative methodological approaches that give valuable insights into how efficiently health care is delivered
• Our simple analytical framework can facilitate the development and interpretation of efficiency indicators

The authors use examples from Europe and around the world to explore how policy-makers and managers have used efficiency measurement to support their work in the past, and suggest ways they can make better use of efficiency measurement in the future.

The study came out of the Observatory’s LSE hub. It links to a forthcoming study offering further insights into how to develop and interpret policy relevant efficiency metrics and to the earlier volumes on performance measurement. It will be of considerable use to policymakers and their advisors, health care regulators, patient representative groups, managers and researchers.

Contents

• Acknowledgements
• List of contributors
• List of abbreviations
• Glossary
• Preface
• 1. A framework for thinking about health system efficiency
  Jonathan Cylus, Irene Papanicolas, and Peter C Smith.
  • 1.1. Why is health sector efficiency important?
  • 1.2. What is inefficiency?
  • 1.3. Allocative inefficiency
  • 1.4. Technical inefficiency
  • 1.5. An analytical framework for thinking about efficiency indicators
  • 1.6. Concluding comments
  • References
• 2. Measuring and comparing health system outputs: using patient classification systems for efficiency analyses
  Wilm Quentin, Alexander Geissler, and Reinhard Busse.
  • 2.1. Introduction: what are the benefits of classifying patients into groups?
  • 2.2. DRG systems in Europe: background and definitions
  • 2.3. Application of DRGs: indicators of efficiency
  • 2.4. Patient classification systems for other areas of health care
  • 2.5. Conclusion: advantages and limitations of patient classification systems
  • References
• 3. Using registry data to compare health care efficiency
  Reijo Sund and Unto Häkkinen.
  • 3.1. Introduction
  • 3.2. Using registry data to define episodes of care
  • 3.3. Constructing indicators based on episodes of care
  • 3.4. Comparing provider performance: the need for risk adjustment
  • 3.5. Adjustment techniques
  • 3.6. Examples of efficiency considerations
  • 3.7. International comparisons
  • 3.8. The EuroHOPE project
  • 3.9. The EuroREACH diabetes case study
  • 4.0. Conclusions
  • References
• 4. Management accounting and efficiency in health services: the foundational role of cost analysis
  Christopher S. Chapman, Anja Kern, Aziza Laguecir, and Wilm Quentin.
  • 4.1. Introduction
  • 4.2. Analysing the challenge of cost system design
  • 4.3. Demonstrating cost system design choices with two detailed examples
  • 4.4. The role of cost data in delivering efficient health care
  • 4.5. Cost data and support of local clinical and managerial decision-making
  • 4.6. Conclusions
  • References
• 5. Health system efficiency: measurement and policy
  Bruce Hollingsworth.
  • 5.1. Introduction: data envelopment analysis and stochastic frontier analysis
  • 5.2. Efficiency measurement methods
  • 5.3. The application of DEA
  • 5.4. Setting out the protocol
  • 5.5. Conclusions
  • References
• 6. Cost–effectiveness analysis
  Ranjeeta Thomas and Kalipso Chalkidou.
  • 6.1. Introduction
  • 6.2. Cost–effectiveness analysis: an overview of its strengths and weaknesses
  • 6.3. Methodological issues in the use of economic evaluations at the micro level
  • 6.4. Cost–effectiveness analysis as a measure of organizational and system efficiency
  • 6.5. Methodological and informational challenges
  • 6.6. Cost–effectiveness analysis in policy: present and future
  • 6.7. Conclusion
  • References
• 7. Cross-national efficiency comparisons of health systems, subsectors and disease areas
  Jonathan Cylus and Mark Pearson.
  • 7.1. Introduction: the basis for interest in cross-country efficiency comparisons
  • 7.2. Cross-country databases containing health system efficiency metrics
  • 7.3. Multicountry health care efficiency studies at the system, subsector and treatment levels
  • 7.4. Key progress and remaining challenges
  • 7.5. Conclusion
  • References
• 8. Efficiency measurement for policy formation and evaluation
  Anita Charlesworth, Zeynep Or, and Emma Spencelayh.
  • 8.1. Introduction
  • 8.2. The definition of public health basket and regulation of reimbursement
  • 8.3. Cost sharing arrangements
  • 8.4. Hospital organization
  • 8.5. Provider payment
  • 8.6. Public reporting of health care data
  • 8.7. Conclusion
  • References
• 9. Efficiency measurement for management
  Alec Morton and Laura Schang.
  • 9.1. Introduction
  • 9.2. Who are managers?
  • 9.3. Frameworks for analysis
  • 9.4. Managerial roles for efficiency analysis in intelligence, design and choice
  • 9.5. Recommendations for practice
  • 9.6. Conclusion
  • Acknowledgements
  • References
• 10. Conclusions
  Jonathan Cylus, Irene Papanicolas, and Peter C Smith.
  • 10.1. Introduction
  • 10.2. Revisiting the analytical framework: key challenges of efficiency measurement
  • 10.3. The role of simple metrics
  • 10.4. Promising opportunities for efficiency measurement
  • 10.5. Concluding remarks
  • References

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The European Observatory on Health Systems and Policies supports and promotes evidence-based health policy-making through comprehensive and rigorous analysis of health systems in Europe. It brings together a wide range of policy-makers, academics and practitioners to analyse trends in health reform, drawing on experience from across Europe to illuminate policy issues.

The Observatory is a partnership hosted by the WHO Regional Office for Europe; which includes the governments of Austria, Belgium, Finland, Ireland, Norway, Slovenia, Sweden, Switzerland, the United Kingdom, and the Veneto Region of Italy; the European Commission; the World Bank; UNCAM (French National Union of Health Insurance Funds); the London School of Economics and Political Science; and the London School of Hygiene & Tropical Medicine. The Observatory has a secretariat in Brussels and it has hubs in London (at LSE and LSHTM) and at the Technical University of Berlin.

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