Measuring Efficiency in Health Care: Analytic Techniques and Health Policy

Citation

Guven Uslu, P. and Linh Pham, T. (2007), "Measuring Efficiency in Health Care: Analytic Techniques and Health Policy", International Journal of Pharmaceutical and Healthcare Marketing, Vol. 1 No. 3, pp. 264-265. https://doi.org/10.1108/17506120710818265

Within the health care sector, there is an increasing concern among policy makers, health managers, academics and the publics in examining the performance of the health care organisations, particularly in terms of efficiency. To persons who are interested in evaluating efficiency in a variety of settings, they will find that there are many excellent books written on performance measurement in recent years. In most of these books, the health care organisations sometimes are employed to illustrate the application of performance measurement techniques. However, there are no systematic surveys focusing on health care organisations' performance measurement in health care sector, which accounts for the large part in the national income and employment. This particular book is perhaps the only one focusing directly on performance measurement issues of health care organisations in the complex health sector context. Owing to the fact that the book is written by three academics, it is a well‐researched book introducing the economic and econometric approaches for modelling efficiency in the health sector and evaluating the usefulness of analytic techniques for policy purposes.

The book is clearly presented, well structured, and laid out. It is accessible and easy to read. It is divided into various sections and each has a number of strengths. The first section, including two early chapters, is devoted to a review of production process in health care organisations as well as the principal concepts of organizational efficiency. One of strengths of the book lies in this section as it explicitly recognises the two different types of health outputs: health outcomes and health activities. This is in marked contrast to many other studies on health organisations' efficiency in general books on performance measurement, in which most of health outputs are referred as health activities.

The next section is the core of the book where it reviews the two pre‐eminent efficiency frontier methods, stochastic frontier analysis (SFA) and data envelopment analysis (DEA). Almost 120 pages of the total 243 pages are devoted to illustrate SFA and DEA using both the cross‐sectional data and panels of data, and compare these two techniques. SFA and DEA techniques are in turn described from the basic to complex models with the illustration of empirical study on the UK health care organisations. This section contributes two strengths of the book as compared to other books on performance measurements. First, it uses a unique example of the UK acute care hospitals throughout main four chapters of SFA and DEA techniques, which provides the readers an excellent frame for understanding the efficiency measurement tools in health care organisations. Second, it explicitly indicates the advantages and drawbacks of each technique, which help the policy makers in choosing the appropriate technique for their analysis. Furthermore, another particular strength is the way it deals explicitly with different types of data in each method, from cross‐sectional data to panel data.

In the final section, the book refers to some crucial issues relating to the efficiency models in health care organisations as well as to some alternative approaches to measure performance. The issues include the weights used to indicate the value of different outputs, the way of setting up the efficiency model, the method to deal with the effects of environmental factors, and the dynamic aspects of efficiency. In order to overcome these constraints, the book describes some alternative methods such as seemingly unrelated regression and multilevel modelling techniques. Thus, this section is useful in providing the readers with the future development of performance measurement techniques.

To conclude, this book is recommended to be used by not only the policy makers in health sector but also managers of health care organisations, researchers, and students with an interest in performance measurement of health care organisations in particular and of the broader health care sector in general.