Improving Health Systems to increase technical efficiency

ABSTRACT

"In recent years; extensive effort has been applied to improve efficiency of health systems functioning. Efficiency attempts to maximise outputs for available resources. Coventionally; this is either technical or allocative efficiency. Allocative efficiency looks at how resources are distributed among competing programmes/activities; while technical efficiency looks at how well these resources are used within the programme/activity. While technical efficiency considers only the process of production; allocative efficiency introduces the notion that society is concerned not just with how an output is produced; but also with what outputs and what balance of outputs are to be produced. It is achieved when it is impossible to improve the welfare of anyone without reducing the welfare of someone else through a change in the output combination (Lipsey and Chrystal; 19995); i.e. the achievement of a Pareto-Optimal state (Donaldson et al 1994). Much effort in efficiency improvements in health has focussed on improving allocative efficiency; allocation of resources among programmes/activities. Techniques of economic evaluation; which allows comparison of choices between alternative health interventions and programmes have been used. Attempts that look at technical efficiency; how these resources are utilised within a programme/activity; have featured less prominently. Health managers directly; or implicitly assume that health interventions are being produced at least possible cost; with the difference in outcomes between competing health programmes ""almost always"" dominating any differences in cost arising from different levels of resource use within a programme/activity. This article seeks to review the feasibility and potential impact of improvements of resource use within a programme/activity on key policy issues; with the aim to provide insight into ways to free up resources to finance health needs""."