Tackling wastage and inefficiency in the health sector
Parker, D.; Newbrander, W.
World Health Forum 15(2) 107-113; Discussion: 114-131
1994
ISSN/ISBN: 0251-2432 PMID: 8018273 Document Number: 288144
While governments and the public worldwide express concern about the best use of scarce resources for health care, reports from developed and developing countries point to examples of the waste of money, health personnel, time, and supplies. Inefficiency occurs when more resources than necessary are used to obtain a result. Wastage occurs when resources are carelessly squandered. Allocative inefficiency occurs when decisions on the use of limited resources fail to yield the greatest possible health gains at the lowest possible cost, and technical inefficiency occurs when the costs of providing specific services or goods are higher than necessary. Decisions made at various levels result in waste. For example, policy makers may overemphasize urban vs. rural services, managers may underutilize health staff, health care workers may prescribe excessively expensive drugs, and users of services may demand inappropriate prescriptions. It is difficult to measure the magnitude of wastage, but estimates are in the billions of dollars annually. Corrective action relies on data obtained from efficiency studies of single elements or subsystems of the health sector. The savings attainable by various actions can be derived by making judgments based on experience and knowledge of the health care system. Combining individual estimates will reveal the cumulative effect of different actions. In addition, cost-effectiveness analysis can be used to determine the magnitude of specific wastage problems. Wastage can be reduced by making changes in policy decisions, management, training, education, and communications. Efforts to reduce waste should concentrate on areas where the greatest savings will result and should take into account the cost of making the necessary changes. Decision-makers can be made aware of the costs and impacts of different health actions through an assessment of available resources and a general understanding of their use. Decentralization of health facilities can also reduce waste by providing improved information and feedback for decision-makers, increasing the control of managers and providers over factors affecting wastage, and increasing the accountability and responsiveness of the health system to its stake-holders.