Determinants of Hospital Efficiency: insights from the literature

Abstract

BackgroundAchieving Universal Health Coverage and other health and health-related targets of the sustainable development goals entails curbing waste in health spending due to inefficiency. Inefficiency is a pervasive problem in health systems. The World Health Organization estimates that on average, 20-40% of the global total health expenditure is wasted. The proportion of total health expenditure attributed to hospitals is high, which implies that improving the efficiency of hospitals will lead to more efficient health systems. This study aims to synthetize the major determinants of hospital inefficiency and to develop a framework to identify causes of inefficiency and develop multi-factor interventions to address inefficiencies. MethodsThe study is based on survey of the literature on hospital efficiency and its determinants. The studies include those that employ ratio methods of efficiency analysis, data envelopment analysis and stochastic frontier models and econometric models such as the tobit regression to assess determinants of technical efficiency. Data was extracted in a table format categorized as those that are within the hospital, outside the hospital but within the health system and those that are outside the hospital and health system in the broader macroeconomic system and analyzed. ResultsHospital efficiency is influenced by factors that may be internal to the hospital or external and thus could be wholly or partially out of the control of the hospital. Hospital-level characteristics that influence efficiency include ownership, size, specialization/scope economies, teaching status, membership of multihospital system and other factors such as case-mix and ratio of outpatients to inpatients. However, the effects of these variables are not definitive and consistent; all depends on the context. Factors out of the direct control of the hospital include geographic location, competition and reimbursement systems. The findings further elucidate that no single factor is effective in addressing hospital inefficiencies in isolation from others.

Efficiency and Resource Allocation in Government Hospitals in Saudi Arabi: A Casemix Index Approach

“…Instead, a multi-faceted approach involving various interventions tailored to the hospital and its environment is essential. By considering multiple factors and adopting multi-intervention packages, hospitals can effectively tackle inefficiencies and enhance their overall performance [ 12 ].…”

“…Additionally, factors like case mix and the ratio of outpatients to inpatients play a role. On the other hand, certain factors lie outside the hospital’s direct control, including geographic location, competition, and reimbursement systems [ 12 ].…”

“…Comparing their efficiency with peers helps to identify areas of improvement and set enhancement plans for financial and operational performance [ 7 ]. Extensive research has shed light on the widespread technical inefficiencies present in hospitals across countries with varying economic development, leading to significant financial losses [ 12 ]. Moreover, optimizing hospital efficiency contributes to the overall sustainability of the healthcare system.…”

Evaluation of performance at Palestinian public hospitals using Pabón Lasso model

“…Hospitals have a paramount role in provision of health care services, which in turn significantly impacts the performance of any health system, especially in developing countries in which hospitals account for 50%–80% of total health spending, 1 , 2 and State of Palestine is no exception to this. In the same vein, hospitals in the European countries consumed about 38% of the total health expenditures in 2016 3 . Hence, it is essential for hospitals to have performance evaluation system for measuring their efficiency and effectiveness, and the productivity of their human resources in order to develop, compete and survive 4 …”

“…In their study, Asbu and colleagues revealed that there are some factors influencing the efficiency of hospitals. These factors encompass ownership, size, specialization economies, teaching status, in addition to other factors such as case‐mix and ratio of outpatients to inpatients, and all depend on the context 3 …”