Measuring Efficiency in Health Care Analytic Techniques and Health Policy

The pursuit of efficiency has become a central objective of policymakers within most health systems. This book examines the relevance of two analytic techniques widely advocated as means of measuring the comparative efficiency of health care organizations - data envelopment analysis and stochastic frontier analysis. These techniques have been deployed in countless health care settings, but contain many methodological pitfalls. This book leads the reader through the basic elements of the methods, and offers a critical assessment of their strengths and limitations when deployed in practical health care applications.

With the healthcare sector accounting for a sizeable proportion of national expenditures, the pursuit of efficiency has become a central objective of policymakers within most health systems. However, the analysis and measurement of efficiency is a complex undertaking, not least due to the multiple objectives of health care organizations and the many gaps in information systems. In response to this complexity, research in organizational efficiency analysis has flourished. This 2006 book examines some of the most important techniques currently available to measure the efficiency of systems and organizations, including data envelopment analysis and stochastic frontier analysis, and also presents some promising new methodological approaches. Such techniques offer the prospect of many new and fruitful insights into health care performance. Nevertheless, they also pose many practical and methodological challenges. This is an important critical assessment of the strengths and limitations of efficiency analysis applied to health and health care.

Figures; Tables; Preface; Acknowledgements; 1. Efficiency in health care; 2. The components of an efficiency model; 3. Stochastic frontier analysis of cross-sectional data; 4. Stochastic frontier analysis of panel data; 5. Data envelopment analysis; 6. The Malmquist Index; 7. A comparison of SFA and DEA; 8. Unresolved issues and challenges in efficiency measurement; 9. Some alternative approaches to measuring performance; 10. Conclusions; Appendix; References; Author index; Subject index; Acronyms.

The pursuit of efficiency has become a central objective of policymakers within most health systems. This 2006 book examines the strengths and limitations of two analytic techniques - data envelopment analysis and stochastic frontier analysis - widely advocated as means of measuring the comparative efficiency of health care organizations.

Rowena Jacobs is a Research Fellow at the Centre for Health Economics, University of York.
Peter C. Smith is Professor of Economics at the University of York.
Andrew Street is Senior Research Fellow at the Centre for Health Economics, University of York.