Intended for healthcare professionals

Education And Debate Economics notes

Definitions of efficiency

BMJ 1999; 318 doi: (Published 24 April 1999) Cite this as: BMJ 1999;318:1136
  1. Stephen Palmer, research fellowa,
  2. David J Torgerson, senior research fellowb
  1. a Centre for Health Economics, University of York, York YO1 5DD
  2. bNational Primary Care Research and Development Centre, Centre for Health Economics
  1. Correspondence to: Mr Palmer

    This is the third in a series of occasional notes on economics

    Decision makers are increasingly faced with the challenge of reconciling growing demand for health care services with available funds.1 Economists argue that the achievement of (greater) efficiency from scarce resources should be a major criterion for priority setting. This note examines three concepts of efficiency: technical, productive, and allocative.

    Efficiency measures whether healthcare resources are being used to get the best value for money.1 Health care can be seen an intermediate product, in the sense of being a means to the end of improved health. Efficiency is concerned with the relation between resource inputs (costs, in the form of labour, capital, or equipment) and either intermediate outputs (numbers treated, waiting time, etc) or final health outcomes (lives saved, life years gained, quality adjusted life years (QALYs)). Although many evaluations use intermediate outputs as a measure of effectiveness, this can …

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