Efficiency in Health Care Systems

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Its without doubt that there are countless ways to define efficiency in the health care system. The different structures of the health care systems around the world give rise to discrepancies in the definitions present. Yet such definitions all share common elements. Hence a unanimous statement of what efficiency is should be adopted to allow the fair evaluation of health care systems internationally. Efficiency should be simply defined as the balanced relationship between the inputs to health care and the maximized outputs that are generated from such inputs. Efficiency can be split into three broad categories, operational efficiency, allocative efficiency and administrative efficiency (Elizabeth A. McGlynn, et al. 2008). With this definition, it is necessary to outline what constitutes towards input and what constitutes towards output, namely public and private funding and their timely and appropriate use towards building well equipped hospital environments, exploiting recent advances in technology and training high quality staff. Here output refers to the well-being of patients; output refers to the increase in benefits that patients receive as a result of inputs. Such results can be partly quantified by a country’s life expectancy at birth, rate of adult and infant mortality and disease prevalence. There are a plethora of common definitions for efficiency but they can be discounted for being too specific, hence losing their ability to be applicable to all situations. An example of such a definition states that efficiency can be defined as “Avoiding waste, including waste of equipment supplies, ideas and energy” (Institute of Medicine 2001). This is a clear and precise interpretation, but waste is not the only factor contributing towards a lack of efficiency. The ill use of resources, leading to the investment of time and money into inappropriate ventures that are not in demand at the time, such as investment in technology when the training of physicians is of a higher importance, also corresponds to inefficiency. Another definition indicates that efficiency is achieved when “Health care resources are being used to get the best value for money” (Palmer and Torero 1999 p.318:1136). This definition brings with it an element of vagueness. What is an objective view of the “best value for money”? Is obtaining money wise results the only element that needs to be considered? Definitions like the aforementioned do act as guidelines towards how efficiency can be measured but a more general version, such as the one that is mentioned here would provide clarity and minimize confusion. Efficiency should hence be defined as the maximization of output given input into health systems. Such a definition encompasses a range of possible elements as “output” but essentially, the amount of output is reflected in the overall wellbeing of the general population and the increase in benefits that they can reap if a different methodology was adopted. Rising health care costs, which in part is escalated by an aging population accentuates the need for an efficient health care system. Translating public and private funds into outputs such as better hospital and aged care center environments, increasing hospital capacities as well as decreasing patient to physician ratios and hence decreasing waiting times are examples of the matching of input and output. The difficulty in measuring efficiency across countries means that a clear definition is a necessity, with such a definition, a series of guidelines can be developed to rate and compare countries’ health care system. Evaluation of a country’s health care system can be achieved through analyzing three main categories of efficiency that is operational efficiency, allocative efficiency and administrative efficiency. Operational efficiency refers to waste of resources during the production process and the delivery of services. Examples of operational inefficiency include the duplication of...
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