Efficiency and Its Measurement

What Practitioners Need to Know

Published in: The American Journal of Managed Care, v. 15, no. 11, Nov. 2009, p. 842-845

Posted on RAND.org on January 01, 2009

by John A. Romley, Peter Hussey, Han de Vries, Margaret C. Wang, Paul G. Shekelle, Elizabeth A. McGlynn

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OBJECTIVE: To help health professionals understand and evaluate the concept of efficiency and its measurement in practice. STUDY DESIGN: The authors reviewed conceptual and practical analyses of healthcare efficiency and its measurement and describe our findings. METHODS: The authors searched the following 3 sources: the MEDLINE and EconLit databases for articles published from 1990 to 2008 using the keywords efficiency, inefficiency, productivity, and economic profiling; seminal economic studies of efficiency identified in MEDLINE or EconLit or in economics reference materials; and the gray literature on efficiency measures developed by private organizations. RESULTS: An essential element of efficiency is that healthcare outputs are as large as possible given their inputs. An efficiency measure specifies outputs and inputs appropriate to the goals of the assessment. Participants in the healthcare system have differing perspectives about the goals of efficiency assessments, relevant outputs and inputs, and validity of measures. CONCLUSION: The broad meaning and the value of healthcare efficiency seem uncontroversial, yet any particular application may be confronted with conflicting perspectives and with practical challenges

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