Second Annual UHC Financing Forum Greater Efficiency for...

SecondAnnualUHCFinancingForum

GreaterEfficiencyforBetterHealthandFinancialProtection

Washington,D.C.April20-21,2017

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Thisisabackgroundpapertothe“SecondAnnualUHCFinancingForum:GreaterEfficiencyforBetterHealthandFinancial

Protection”.ThispapersetsthestageforthepresentationsanddiscussionsattheForumandwaspreparedundertheguidanceoftheForumTechnicalWorkingGroup.Theinformationprovidedinthisdocumentdoesnotnecessarilyrepresenttheviewsorpositionofthe

organizationsrepresentedontheTechnicalWorkingGroup.

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ContentsI. ExecutiveSummary........................................................................................................................3

II. Introduction...................................................................................................................................6

III. Whatisefficiency?.....................................................................................................................7

IV. Sourcesofinefficiency................................................................................................................9

1) Doingtherightthings...............................................................................................................11

i. Mixofhealthinterventionsandpackages...........................................................................11

ii. Preventionversustreatment...............................................................................................12

iii. Thebalancebetweengovernance,administration,publichealthfunctionsandpersonalservices.........................................................................................................................................13

iv. Inter-sectoralandmulti-sectoralaction...............................................................................13

v. Financialprotectionandservicecoverage...........................................................................14

2) Doingtherightthingsintherightplace...................................................................................15

3) Doingthingsright.....................................................................................................................17

i. HealthServices.....................................................................................................................18

ii. HealthSystemsandtheHealthFinancingComponent........................................................22

V. Identifyingthemostimportantsourcesofinefficiency...............................................................24

VI. Measuringandmonitoringinefficiency...................................................................................25

1) Macro-efficiency.......................................................................................................................25

2) Efficiencyincomponentsofthehealthsystem.......................................................................27

VII. Strategiestoimproveefficiency...............................................................................................32

1) Technicaloptionsforimprovingefficiency..............................................................................33

2) Whatwedonotknow..............................................................................................................43

i. Payingforresults..................................................................................................................43

ii. Theprivatesectorandefficiency.........................................................................................46

iii. Humanresourcestrategiesforefficiency............................................................................46

iv. Costsofimprovingefficiency...............................................................................................47

v. Politicaleconomyissues.......................................................................................................47

VIII. Efficiencyandequity................................................................................................................48

IX. Conclusions..............................................................................................................................49

X. Recommendations.......................................................................................................................53

XI. References................................................................................................................................55

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I. ExecutiveSummaryThenatureandextentofinefficiencyinhealth

Theconceptofefficiencyinhealthincludesdoingtherightthings,intherightsettings,andintherightway.Efficienthealthsystemsproducethebestpossiblehealthandfinancialprotectionoutcomesfromtheavailableresources.

Inefficienciesexistinhealthsystemseverywhere:

§ Doingthewrongthings(e.g.fundinghighcost,lowimpactinterventionsbutnotfullyfundinglowcost,highimpactinterventions,particularlyintertiarycaresettings.)

§ Doingtherightthingsinthewrongsettings(e.g.relyingonhospitalsratherthanprimaryhealthcare.

§ Doingthingsbadly(e.g.leakagesandwasteintermsofpilferingofmedicinesthroughthesupplychainandmedicineslefttoexpireorstoredinpoorconditions.)

Themagnitudeofinefficienciescanbestaggering:takingallformsofinefficienciesintoaccount,countriescanwasteanestimated20%-40%oftheirhealthresources,missingtheopportunitiestouseresourcesmoreefficientlytoachievemuchmore.

Sourcesofinefficiency

Thevarioussourcesofinefficiencyinhealthhavebeenwellestablished.Manyarelinkedtothemaincost-driversinhealthsystems:medicines,humanresourcesforhealth,andhealthfacilitiesandinfrastructure,particularlyhospitals.

Thenatureofinefficiencies,however,differbysetting.Countriesmightberelativelyefficientinoneareaandlessefficientinanother.Foreachcountrytounderstandhowtoreducetheirinefficiencies,theymustassessitsmostimportantcauses(usingthetypeofchecklistprovidedinthisdocument),thendecidewhicharemostfeasibletoaddresstechnicallyandpolitically.

Countriesthenneedtodevelopstrategies,atime-tableforchange,andastrategytomonitorprogress.

Animportantimplicationisthatcountrieswillneedtochooseindicatorstotracktheirprogressthatrelatetotheareasofinefficiencytheyareabouttotackle.

Improvingefficiency

Manyoptionsforimprovingefficiencyexist,andallcountriescantakeactionstoachievebetterhealthandfinancialprotectionusingtheiravailableresources.

Someoftheoptionslieinthehealthfinancingsystem.Theyincluderaisingrevenuemoreeffectively,usingthetaxsystemtoreduceconsumptionofproductsthatharmhealth,reducingfragmentationinpooling,ensuringthatpooledfundspurchasetheinterventionsthatdeliverthegreatestimpactforthemoney,andmodifyingproviderpaymentmechanismstoencouragebothefficiencyandquality.

Othersolutionsrequireactionsinthewiderhealthsystem.Forexample,improvingmedicines-relatedefficiencycertainlyinvolvestheabilitytobuyatthelowestcost,butmayalsoincludethecapacitytotestandensurequalitythroughoutthedistributionchain,tomodifyregulationsorlegislationtoencouragetheuseofgenerics,anddemand-sidestrategiestoovercomeconcernsinprescribersandpatientsaboutthequalityofgenerics,andtoencouragerationaluseofallmedicines.

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Thepoliticsofimplementingpoliciestoimproveefficiencycanbecomplexbecausechangesmayfaceoppositionbypowerfulstakeholders.

Someofthepossiblesolutionsaremorelikelytoproducerapidreturnsthanothers.Theseinclude,butarenotlimitedto:

§ taxationtoreduceharmfulproductconsumption;§ improvingbudgetflexibilitytoimprovetimelyreleaseandexpenditureofavailablefunds;§ introductionofgenericmedicinespolicies,andtransparent,competitivebidding(where

possible)forpurchases.§ allowhealthworkersatlowerlevelstotakeonmoreresponsibilityasappropriate(task

shifting

Othersmayneedshort-terminvestmentsbutrequirelonger-termcommitmentbeforetheresultsstarttobeseen.Forexample,movingtowardsactivepurchasing(purchasingbasedonanexplicitassessmentofneeds,pricesandvalue)requiresstaffskillsandcomputerizedinformationsystemsthatmightrequiretimetodevelop.

Toaccompanytheseactions,internationalcollaborationisneededtocontinuallysearchfortechnologiesthat“shiftthefrontier”,identifyingfurtheropportunitiestoimprovehealthandfinancialprotectionatlowcost.Thismayinvolvetranslatingexistingtechnologiestolow-costsettings,ordevelopingnewapproaches,suchasvaccinesforHepatitisCandHIV/AIDS.

Controversiesandmissinginformation

Despiteknowingalotaboutthenatureofinefficiencyandpossibletechnicalsolutions,thereisstillasurprisingamountthatisnotknown,orthatengenderssubstantialdisagreement.

Remarkablylittleisknownaboutwhatworksatthesystemiclevel.Howcanhospitalefficiencybeimproved?Whatistheappropriateroleoftheprivatesectorinimprovingefficiency?Whattypesofincentiveskeepstaffmotivatedandensurequality,butareaffordable?Theevidenceissimplynotyetconclusive,whichmeansthesequestionscannotyetbeanswereddefinitively.

Partoftheproblemisthatmanystudiesofspecificinterventions,forexample,results-basedfinancing,havefocusedonserviceutilizationandquality,withlittleexaminationofcosts.Thisresearchtrendmakesitverydifficulttodeterminewhethertheseinterventionsareagooduseofscarceresourceseveniftheywork,andiftheycanbefinancedinthelongterm.

Inothercases,themethodsforundertakingthenecessaryanalyticalworkarenotparticularlyuseful.Forexample,healthtechnologyassessmentbasedoncost-effectivenessanalysisisfrequentlyusedtohelpguidedecisionsabouttherightinterventionmix.Itisappropriateforhigh-incomecountrieswherethequestioniswhethersmallchangesinexpenditure,ontopofwell-establishedexistingpackagesofservices,arewarranted.ThistypeofHTAisnotparticularlyusefulinmanylowerincomesettingsbecausethechangesneededarenotmarginal.Techniquesforassessingwhatmixofinterventionsshouldbeavailableatprimarylevel,forexample,havethecapacitytotakeintoaccountthefactthatcostsandimpactvarywithfactorssuchasscaleandscopeofinterventions,andwhetherthestaffneededtodelivercost-effectiveinterventionsareavailable.HTAisalsooflimiteduseinassessingtheappropriatemixbetweenpersonalandpopulationbasedhealthservices,andbetweengovernanceandpublichealthfunctionsandpopulation-basedandpersonalhealthinterventions.Theseareasneedfurtherdevelopment.

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Afinallimitationtocountrieswantingtotakeontheefficiencyagendaisthatthedataneededtoformallyassessthemajorcausesofinefficiencyandtomonitorprogressisextremelylimited.Thisispartlybecausefewcountriescurrentlyundertakeregularassessmentsoftheirefficiency,sotheindicatorsthatareavailablearemostlycollectedforotherpurposes.

Recommendations

Countries§ Undertakeanassessmentofthemajorcausesofinefficiencyandthosethatarefeasibleto

changeintheshort,mediumandlonger-term.§ Developandimplementastrategyforimprovingefficiencyintheshorttomediumterm–this

shouldbepartofahealthfinancingstrategyalthoughsomeoftheactionswillneedtoextendbeyondhealthfinancing.

§ Starttoputinplacethebackgroundinvestmentstoensurethelonger-termoptionscanbeundertaken–e.g.legislation,consultation,computerizedinformationsystems,staffskills.

§ Undertakebothpoliticalandtechnicalanalysisto identifywhichreformshavethegreatestchanceofsuccess,thenbuildsupportandnegateopposition.

§ Develop a set of efficiency indicators specific to the country’s main causes of healthinefficiencies,anddevelopanagendaforachievingmorefortheavailableresources.

§ Investinmethodstocollectindicatordataandtoevaluateprogressregularly.§ Identify areas of possible inter-sectoral or multi-sectoral actions that would achieve the

largesthealthimpacts,andthepoliticalfeasibilityofinfluencingothersectorstoimplementthem(perhapsincollaborationwiththeMinistryofHealth).ThiswouldhelptheMinistryofHealth target the key ministries and make the best use of their own limited time andresources.

Internationalcommunity(includingresearchersinallcountries)§ Routinelyassessthecostsaswellasimpactofeffortstoimproveefficiencysothatcountries

candetermine theefficiency and financial sustainabilityofdifferentoptions for improvingefficiency.

§ Developanagendatoidentifythecost-effectivenessofeffortstoredresshealthinequalitiesaspartoftheefficiencyandequitydiscussion.

§ Developmethodswhichcanbeusedtohelpcountriesdeterminewhichofthemyriadofinter-sectoralormulti-sectoralactionstoimprovehealthshouldbegivenprioritywiththelimitedtimeandfinancialresourcesavailabletoaMinistryofHealth.

§ Continue to invest in the technologies that might “shift the frontier” of possibilities”,identifyingfurtheropportunitiestoimprovehealthandfinancialprotectionatlowcost,suchasvaccinesforHepatitisCandHIV/AIDS.

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II. Introduction

TheseriesofAnnualForumsonFinancingUniversalHealthCoverage(UHC)focusonhealthfinancingactionstosmooththepathtowardsUHC–definedformallyastheambitionthatallpeoplewillobtainthehealthservicestheyneed,ofgoodquality,andwithoutfinancialhardshiplinkedtopayingforthemout-of-pocket(WHO2010a).ThefirstForumin2016dealtwithrevenuegeneration,orhowtoraisefundstomeettheneedsanddemandsofthepopulationforgoodqualityhealthservicesandfinancialprotection,whicharekeycomponentsofUHC.Thisisimportanttocountriesatallincomelevels,althoughtheabsoluteneedforadditionalrevenueisparticularlyhighinpoorercountries.Insomecountries,theshortageoffundsissoseverethatmeaningfulprogresstowardsUHCwillnothappenwithoutsubstantialincreasesinrevenuegeneration.ThisiswhyrevenuegenerationwasthetopicofthefirstForum.

ThesecondAnnualForumonFinancingforUHCturnstothequestionofhowtousetheavailableresourcesinthemostefficientway.Theextentofinefficiencyandwasteinhealthcanbestaggering,andeveniftheestimatesarerelativelyimprecise,theygiveanideaoftheorderofmagnitudeoftheproblem.Acommonlyquotedfigureisthatbetween20%and40%ofallhealthresourcesmightbeeffectivelylosttovariousformsofinefficiency(WHO2010;Chisholm&Evans2010).Alongsimilarlines,theOECDrecentlyreportedtheresultsofanumberofstudiesonwaste(onecomponentofinefficiency),andshowedinselectedOECDcountries,somewherebetween20%and50%ofhealthexpendituresarelikelybeingwastedduetoinefficiencies(OECD2017).

Improvedefficiency(achievingmorewiththeavailableresources)enablescountriestoobtaingreatercoverage,andtodeliverqualityhealthservicesandfinancialprotectionforthesameexpenditures.Itcanalsoimprovehealthoutcomes.Forexample,arecentIMFworkingpapersuggeststhatAfricancountriescouldraiselifeexpectancyatbirthbyaboutfiveyearsonaverageiftheyusedtheirhealthresourcesmoreefficiently(Grigoli&Kapsoli2013).

Improvedefficiencycansometimesalsosavemoneyorreducetherateofincreaseofhealthexpenditures–thishasbeencalled“bendingthecurve”thatdepictstherelationshipbetweenhealthexpendituresandGDPovertime(Coady,FranceseandShang2014;OECD2017).This,however,doesnotalwayshappen.Manyefficiencyreformsrequireupfrontinvestmentsbeforetheystarttoshowtheimprovementsinhealthand/orfinancialprotectionthatareorganizationofwhatisdone,orthewaythingsaredoneaspirestoachieve.

Recognizingthatthehealthsectormustcompetewithothersectorsintheallocationofpublicfinances,MinistriesofFinancehavesometimesbeenreluctanttoincreaseallocationstoMinistriesofHealthwhichareperceivedaseithernotfullyspendingthefundstheyalreadyhave,ornotusingthemefficiently(Gillingham2014;Tandonetal.2014).Investmentsinothersectorsaresometimesconsideredtooffergreatervalueformoney.Therefore,improvingefficiencyinhealthcanalsohelptoconvinceMinistriesofFinancetoallocatemorepublicfundstohealth:byachievingmorewithexistingresources,additionalresourcesmaybecomeavailable.

ImprovingefficiencyandhealthfinancingstrategiesisjustapartofprogresstowardsUHC.Withinthehealthsector,furtherrequirementsinclude:sufficientmotivatedhealthworkersoftherighttypelocatedclosetopeople;goodqualityinfrastructure,appropriatelylocated;afocusonhealthservicequality;sufficientessentialmedicinesandotherhealthproducts;highqualityleadershipandgovernance;andtimely,accurateinformation.Progresscanalsobefacilitatedbypromotingkeyinter-sectoralactions:bothactionsinothersectorsthatimprovehealth,andactionsinthehealthsectorthatimproveincome,educationanddevelopmentmoregenerally–whichin

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turnfeedbackintohealthimprovements.Whilerecognizingthis,thefocusonthisForumisonhealthfinancingandachievingmorewiththeavailableresources.

Themainobjectiveofthepaperistohighlightwhatisknownandwhatisnotknownaboutthemaincausesofinefficiencyinhealthandwhatcanbedonetoreducethem.TheagendaoftheForumwasdevelopedinresponsetothisanalysis,focusingonareaswhereeitherknowledgeisstillinadequateforinformeddecisionmaking,orwherethereiscontroversyordisagreementamongexperts.

Thenextsectionofthispaper(Section2)beginsbydefiningtheeconomicconceptofefficiencyandhowithasbeenusedinhealth.Section3thenidentifiesthecommonsourcesofinefficiencyinhealth,animportantstartingpointforcountriesseekingtoachievemorewiththeavailableresources.Section4considersindicatorsthatcanbeusedtoidentifywhichformsofinefficiencyarethemostimportantineachsettingbeforedevelopingpoliciestoredressthem,andthentotrackprogressinreducinginefficiency.

Section5turnstoidentifyingrecognisedtechnicalsolutionsplusareaswheretherearestillimportantgapsinknowledge.Italsoconsiderswhatisknownabout“how”toensurethedesiredstrategiesareimplementedtakingintoaccountthepoliticaleconomyofefficiencyreforms.

Makingahealthsystemmoreefficientdoesnotnecessarilymeanthatitwillbecomemoreequitable.Forexample,expandingcoveragebyfirsttargetingpeopleinisolatedareasratherthanthoseinmoredenselypopulatedsettingsmightnotbethemostefficientoptionintermsofimprovingpopulationhealthlevelsorprovidingfinancialprotection,yetacountrymayconsiderthisapproachtobedesirableonequitygrounds.Thebulkofthispaperfocusespurelyonefficiencybutturnstothequestionofequityandpossibletrade-offswithefficiencyinSection6.

Thefinalsection(Section7)summarizesthemainfindingsofthepaper,highlightingareaswherethereisinsufficientevidencetoguidepolicy,wherethereiscontroversy,andwheretherearepossiblequickwinsintermsofimprovingefficiency.

III. Whatisefficiency?

FormaldefinitionsofefficiencyfromeconomicsandhealtheconomicsaresummarizedinBox1.Inessence,ahealthsystemthatisefficientproducesthemixofhealthservicesthatmaximizestheoutcomessocietyexpectsfromitshealthsystem,usuallypopulationhealthimprovements,usesthemixofinputsthatcoststheleast,andcombinestheseinputstoproducethemaximumpossibleoutputs.Itwouldnotbepossibletogetmorehealthforthesamelevelofexpenditurebyeitherchangingthemixofinputs,gettingmoreoutofthechosenmixofinputs,orproducingadifferentsetofhealthgoodsandservices.Box1:FormalDefinitionsofEfficiency

Generaleconomicsdefinesthreetypesofefficiency.Technicalefficiencyisachievedwhenaparticularsetofinputsachievesthemaximumpossibleoutput(s).Technicalefficiencycouldbeachievedwithaveryexpensivesetofinputs,soproductiveorproductionefficiencyiswhentheinputsusedtoproducethisoutputhavetheleastcost,whileallocativeefficiencyrequirestheproductionofthesetofoutputsthatpeoplevaluethemostforthegivenresources(e.g.seeHollingsworth2008).

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Healtheconomicshastypicallydefinedonlytwosortsofefficiency-allocativeandtechnical.Allocativeefficiencyhasbeendefinedasrequiringthatthehealthgoodsandservicesproducedarethosethatmaximizesociety’sobjectivesforthehealthsector,usuallytranslatedintosomemeasureofpopulationhealthstatusorimprovement.1Technicalefficiencyistakentomeanachievingthemostwiththeavailableinputs.Thequestionofwhatmixofinputsintheproductionprocessistheleastcostmix(productionefficiencyingeneraleconomics)isfrequentlysubsumed,sometimesimplicitly,intotechnicalefficiencyandsometimesintoallocativeefficiency(Yip&Hafez2015;seeCylus,Papanicolas&Smith2013forausefuldiscussionofthevarioustypesofinefficiencyandhowtheyhavebeenusedinhealth).

Ratherthanusetheformaldefinitionsofefficiencyasanorganizerforthediscussion,we

followaframeworksuggestedbyYip&Hafez(2015)whichfocusesonthekeypolicyquestionsfacingcountriesseekingtoimprovetheefficiencyoftheirhealthsystems:

1. Doingtherightthings(allocativeefficiency:whatmixofinterventionsmaximizehealthoutcomesfortheavailableresources?);

2. Doingthemright(acombinationoftechnicalandproductiveefficiency:arethemixofinputsthelowestcostmix,anddotheyachievethemaximumpossibleoutputs?).Weaddanadditionalcategory–doingtherightthings“intherightplaces”.Decisionson

whichcaresettingservicesshouldbedeliveredhaveasignificantimpactontheabilityofhealthsystemstoimproveormaintainhealthandfinancialprotection.Commontrade-offsarebetween:thedifferentlevelsofcare(e.g.community,primary,secondary,tertiary);dayversusinpatientcare;long-terminstitutionalcareversushomecare;andsocialcareversusmedicalcare.Adequatecoordinationandcontinuityofcare,bothwithinandacrosslevels,arecriticalelementstoensuringthatservicesaredeliveredintherightcaresettings.

Althoughhigh-incomecountrygovernmentsoftenurgelineministriestoimproveefficiency

inthefaceofbudgetcuts,ortorestrainexpendituregrowth,themainobjectiveofimprovingefficiencyinlowandlower-middleincomecountriesisnottoreduceoverallspendinginhealthorcutbudgets.ItistomakebetteruseofavailableresourcestoachievefasterprogresstowardsUHC,betterhealthandgreaterfinancialprotection.Thisiswhythepaperfrequentlyusestheterm“achievingmorewiththeavailableresources”todescribetheterm“efficiency”.

ThishastwoimplicationsforthewayefficiencyisconsideredinthecontextofUHC.First,thetraditionalwayofconsideringefficiencyfocusesonhealthoutcomesforpatientsorapopulation.Inthiscontext,increasingcoveragewithhealth-sectorinterventionsisonlyonepathwaytoimprovinghealthoutcomes.Multi-sectoralorinter-sectoralapproachesarealsoimportantandneedtobeconsideredinanyassessmentofthemostefficientwayofimprovingpopulationhealth.TheyarediscussedinSection3.

Second,theconceptofUHCacknowledgesthatpeoplevaluenotonlythehealthimprovementsthatresultfromappropriateuseofhealthservicesbutalsotheassurancethatusinghealthserviceswillnotresultinseverefinanciallosses.This“valueofinsurance”-whereinsuranceisinterpretedinthebroadsenseofareductionintheriskofpeopleneedingtofindthefundsforhigh,unexpectedhealthcostsinthefuturethroughsomeformofprepaymentandpooling-hasbeenwellacceptedineconomicsashavingtwocomponents.Thefirstisthewelfarebenefitassociatedwithpeopleknowingtheywillnotsufferunexpectedfinanciallossesintheeventofillness,andthe

1Sometimestheassumedmaximispopulationwelfare(seePalmer&Torgerson1999)orthevalueofthehealthimprovement(aninterpretationofQALYs).

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secondisthewelfarebenefitofknowingthattheywillbeabletoaffordtousehealthservicesthatwouldhavebeenunaffordableintheabsenceofinsurance(seeNyman1999).2

Todate,littleattentionhasbeenpaidtounderstandingthisbroaderconceptofefficiencyinthecontextofasocietyseekingtoimprovebothaspectsofUHCatthesametime–coveragewithqualityhealthservicesofalltypes,andcoveragewithfinancialprotection.Arecentexceptionisthedevelopmentofanextendedcost-effectivenessanalysis,whichseekstounderstandtheimplicationsofvariouschoicesofinterventionmixes,notonlyonhealthoutcomesbutalsoonimpoverishment,oneconsequenceofalackoffinancialprotection(seeVerguetetal.2013;Verguetetal.2014;Verguetetal.2015;Shrimeetal.2015).ThisisalsodiscussedfurtherinSection3.

IV. Sourcesofinefficiency

Countriescannotmakeinformedchoicesaboutwhichinefficienciestheycantacklewithoutidentifyingthemostimportantcausesinagivensetting;thepragmaticwayofachievingthisistostartwithoneofthechecklists,whicharebasedonananalysisoftheliteratureoncountryexperiences.Table1providesachecklistbasedonanapproachtakenbyWHOin2010(WHO2010a).ThischecklisthasbeenmodifiedtoincorporatemorerecentexperienceandsomemanagerialandadministrativeinefficienciesthatwerenotconsideredintheWHOreport,drawingonrecentworkbytheOECD(OECD2017).

Thetableisorganizedaccordingtothethreekeypolicyquestionsdiscussedearlier:doingtherightthings,doingthemintherightplacesanddoingthemright.Thesectionondoingthingsrightbuildsfromhealthsysteminputs(medicinesandothermedicalproducts,healthworkforce,infrastructureandequipment)totheoutputsandoutcomestheyproduce(healthservices).Italsoincludesinefficiencieswithintheoverallhealthsystemmanagement,organizationandgovernanceandwithinthehealthfinancingsystem.Table1:CommonCausesofInefficiency

DoingtherightthingInefficiencycouldresultfromanimbalancebetween:population-basedpromotionandpreventionversuspersonalandcurativeservices;highcost,lowimpacthealthservicesversuslowcost,highimpactservices;governanceandpublichealthfunctionsversusotherhealthservices.NotdoingtherightthinginthecontextofUHCcanmanifestalsoasinadequateattentiontofinancialprotectioncomparedtotheavailabilityandqualityofhealthservices,orviceversa.

Doingthingsintherightplace

Inefficiencieswouldcommonlyincludeservicesbeingprovidedathigherlevelinstitutionsthatcouldbedonewiththesamequalitybutwithlowercostsatlowerlevelsofthesystem(e.g.avoidableoutpatientspecialistvisitsandemergencydepartmentvisits),avoidableinpatientadmissionsorlongerthannecessarylengthofstay,oracuteinpatientsurgerieswhichcouldbeperformedinday-care.

2Formoreinformationontheextentofhealthshocksonconsumptionandtheabilitytosmoothconsumptionwithinsurance,seeforexample,Limwattananonetal.2015,Wagstaff&Lindelow2010,Chetty&Looney2006.

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Doingthingsright–inefficienciescanbelinkedtohigher-costinputschosen,orinputsnotachievingtheirmaximumpotentialA. Inputs

1. Medicines:a) Under-utilizationofgenericsorpayingtoomuchforanyspecificmedicine;b) Useofineffectivemedicines,thewrongmedicines,orusingthematthewrongtime;c) Overuseorunnecessaryuse.

2. Infrastructure(e.g.healthfacilities)andequipment:a) Inappropriatehealthfacilitysize,particularlyhospitals,foroptimalefficiency;b) Underorover-capacityinhealthfacilities;c) Equipmentthatispurchasedandcannotberepairedorisnotusedoptimally.

3. Personnel:inappropriatemixbetweendifferentcadres;locatedinthewrongplaces;demotivatedworkerswithlowproductivity(e.g.lowvisitsperhealthworkersperday,highratesofabsenteeism);poorqualityofcareprovided.

4. Inappropriatemixofinputs:e.g.healthworkersbutnomedicinesorothermedicalproducts,alowercostmixofinputsispossibletoachievethesameoutputs.3

B. Outputsandoutcomes

5. Healthservices:a) Unnecessary,tests,procedures,treatments/surgerycomparedtoneed;b) Medicalerrorsandlowqualitycare,includingdoingtheinterventionsatthewrong

time(e.g.late)meaningtheinputsandoutputsdonotachievethedesiredoutcomes;c) Underuseofneededhealthservices(prevention,treatment,rehabilitation,palliation;

includesmedicines)leavingpatientsvulnerabletounnecessarydisease,suffering,andpossibleincreasedmedicalcostssubsequently.

C. HealthSystemStructure,OrganizationandGovernanceincludingtheHealthFinancing

System6. Waste(includingexpiredmedicines),corruption,fraud.7. Sub-optimalpublicfinancialmanagementpracticesincludinglatedisbursementsfrom

theMinistryofFinance,alargenumberoflineitemsorinflexibilityacrosslines,lowbudgetexecutionrates.

8. Inefficiencyinraisingrevenues(forhealth),particularlywhenrevenueraisingforhealthisindependentfromgeneralgovernmentrevenuecollection.

9. Fragmentationinthesystem:inpooling,butinthebroaderhealthsystemaswell-e.g.procurement,supplychains,laboratories,servicedelivery.Thiscanbeassociatedwithdomesticdecisionssuchasestablishingseparateinsuranceschemesfordifferentpopulationgroups,ortodecisionsmadebyexternalpartnerstobypassexistingnationalsystemsandestablishparallelsystemsandstructurese.g.financialflows,audit,M&E,servicedelivery,laboratories.

10. Administrativeinefficiency:higher-than-necessarycostsfortheservicesoffered,includinginhealthinsuranceagencies.

3Therearesomeoverlapsinevitablybetweenthevariousformsofinefficiency.Forexample,healthworkerswithoutmedicinesordiagnostictestsmightbelinkedtoadministrativeefficiency,whileusinghighercostinputstoachieveresultsthatlowercostinputscouldachieveisoneaspectofhealthworkforcemanagementaswell.

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1) DoingtherightthingsWithresourcescarcity,doingtherightthingsrequiresexplicitdecisionsaboutwhich

interventionsshouldbeavailable,andwithinthat,thebalancebetweenpreventionandtreatment,governanceandpublichealthfunctionsandpersonalhealthservices,andwhattypesofinter-sectoralactionstoimprovehealthshouldbepursued.TheseissuesarediscussedbrieflyinturnfollowingtheorderofTable1.

i. MixofhealthinterventionsandpackagesMostoftheliteratureondoingtherightthingshasfocusedontheappropriatemixofhealth

interventionsusingcost-effectivenessanalysis.Theliteratureonthecost-effectivenessofspecificinterventionsoragroupofinterventionsforaparticularhealthproblemisvast,toovasttoreferencefullyhere(e.g.Cambianoetal.2015;Edejeretal.2005;Mocketal.2015;Kimetal.2015;Ortegonetal.2012;Rozeetal.2015;Whiteetal.2011).Thereislessanalysiscomparingtheefficiencyoffundingasetofdifferenttypesofinterventionsacrosspriorityhealthproblems,thesortofanalysisrequiredifcountriesaregoingtodevelopanessentialpackageofhealthservicesfromscratchormodifytheirpackagebasedonthebestpossibleevidence.4Fromthefewanalysesthatareavailable,theevidenceshowsthatmanycountriesarenotfullyfundinghealthinterventionsthatarelowcost,highimpactintermsofpopulationhealthbenefits(suchaschildhoodimmunizations)whilehighcost,lowimpactinterventions(suchasformsoftertiarycareforchronicdiseases)doreceivefunding(Chisholmetal.2012;Evansetal.2005;Laxminarayanetal.2006;Jamisonetal.2006;WHO2017a).

Inthesecases,reallocationofresourcestowardsthelowcost,highimpactinterventionswouldimprovepopulationhealthforthesameexpenditure.Therearefewexplicitanalysesofthelikelygainsofdoingthis.OneexceptionistheWHO(2010)estimatethatswitchingbetweeninterventionsinthismannercouldproducethesamehealthbenefitsatbetween16%and99%ofthecurrentcosts(dependingonthehealthproblembeingstudiedandthecountry).5

Thereareanumberoftechnicalandpracticalproblemswithmuchofthecost-effectivenessliteraturethatlimititsvaluetocountrieswishingto“dotherightthing”bychangingtheirinterventionmixesordevelopingapackageofinterventionstowhichallpeoplewillbeguaranteedaccess.First,muchoftheanalysisasksifnewinterventionsshouldbefundedwithnoguidanceaboutwhatinterventionsshouldbereducedifresourcesarescarce.Thefundamentalquestionofwhichmixofinterventionswouldmostimprovepopulationhealthwiththeavailableresourcesisrarelyasked.Second,thecost-effectivenessofanygiveninterventiondependsonmanylocation-specificfactors,includingcoststructures,diseasepatterns,thepopulationagepyramid,whatothertypesofinterventionsarebeingundertakenthatmightinteractintermsofcostsoreffects,andcurrentlevelsofcoverage.Itisnotnecessarilyappropriatetoextrapolatetheresultsofastudyundertakeninonecountrytoothercountries,whosevariablesmaydiffersubstantially.Third,costsandeffectscanchangeovertimewithchangesindiseasepatternsandcosts,andtechnologicalinnovations.

Itwouldbedifficultforanycountrytoundertakestudiesofthecost-effectivenessofallpossiblehealthinterventions–promotion,prevention,treatment,rehabilitationandpalliation,aswellaspersonalandpopulation-based–intheirownsettings,andupdatethemfrequently,even

4Bymodify,wemeanaddandsubtract.Traditionalincrementalcost-effectivenessanalysislooksatwhatservicesshouldbeadded,butrarelyisguidancegivenaboutwhatshouldbereducedtomakewayforthenewinterventionwhenadditionalresourcescannotbefound.5Theseestimatesdidnottakeintoaccountthetransactioncostsinvolvedinmakingthechanges.

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withgoodtechnicalcapacities.Internationalinitiativessuchasthevariousiterationsofthediseasecontrolprioritiesproject(DCP)andtheWHO-CHOICEprojecthavesoughttocollatetheinformationoncost-effectivenessfromawidevarietyofinterventionsinwaysthatcouldhelpcountries,particularlythosewithlimitedtechnicalcapacity,understandwhichinterventionscouldbegivenhighpriorityintheirsettings(Jamisonetal.2006;Mocketal.2015;Ortegonetal.2012;WHO2017a).WHO-CHOICEalsoreportsresultsatdifferentlevelsofcoverage,takingintoaccountpossibleinteractionsbetweeninterventionsintermsofcostsandeffects.6

Thereareseveralwell-acceptedlessonsfromthistypeofwork.Incountrieswithahighburdenofcommunicablediseaseandhighmaternalandchildmortality,packagesinvolvingpreventionandtreatmentformaternalandneonatalcare,childhealth,HIV/AIDS,tuberculosisandmalariaarehighlycosteffective(Laxminarayanetal.2006).Mostcountriescurrentlyseektomakethesepackagesuniversallyavailable,evenatlowlevelsofincomepercapita.Otherinterventionsthatseemtoberelativelycost-effective(e.g.preventionoftrafficaccidents,reductionoftobaccouse,surgicalwardsindistricthospitals,treatmentofacutemyocardialinfarctionandsomesecondarypreventionforcardiovascularevents)arenotyet,however,universallyavailableinlowandmiddle-incomecountries.ThereasonswhytheyarenotwidelyavailableareconsideredfurtherinSection6.

Thishighlightsanotherproblemwiththisliterature–itrarelyconsiderstheresourceenvelope.Financialconstraintspreventmostlowandlower-middleincomecountriesassuringuniversalcoveragewithalltheinterventionsthattheliteraturesuggestsarecost-effective:thisisafailureoftheliteraturemorethanafailurebycountries.

Moneyisnot,however,theonlyconstraint,atleastintheshort-to-mediumterm.Othersincludethenumber,skillmixandlocationofhealthworkers,andthetypeofhealthinfrastructureavailable,includinglocationandtypeofhospitals,primarycarefacilitiesandcommunityfacilities.Effortstodevelopasetofguaranteedhealthservicesmusttakeintoaccountalloftheseconstraints.Thisrequiresarelativelycomplicateddecision-makingprocess.Formally,itwouldrequiresomeformofprogrammingmodelratherthansimplycomparingcost-effectivenessratios,althoughasecond-bestalternativeistocomparethenon-financialresourceneedsofanyproposedsetofcost-effectiveinterventionswiththeavailablenon-financialresourcestoassessthefeasibilityofimplementation.

ii. PreventionversustreatmentPartofthecost-effectivenessliteraturehasfocusedonpreventioneitherbyitselfofin

comparisontotreatmentofvarioustypes(e.g.DiabetesPreventionProgramResearchGroup,2012;Chisholmetal.2012;Granichetal.2012;Jamisonetal.2006;Kuykenetal.2015;WHO2017a).Theresultsarenotparticularlysurprising:sometypesofpreventionareverycost-effectiveandsomearenot.Sometypesoftreatmentarecost-effectiveandsomearenot.Preventionisnotalways“better”thancureinthesenseofproducingmorehealthforthemoney,althoughoftenitis.Sometimes,thoughnotalways,expenditureonpreventionresultsinanetsavingoffuturetreatmentcosts.7Thedecisionaboutfundingpreventionortreatmentneedstobetakenonacase-by-casebasis,andeachcountrywillendupwithitsownmixdependingonfactorssuchasdiseasepatterns,coststructures,andhealthworkercapacities.Itisnotpossible,therefore,tooffergenericguidanceastowhatshare

6Thisallowsforeconomiesanddiseconomiesofscale,economiesofscope,andinteractionsbetweeninterventionsintermsofeffectiveness.7Thatisthepresentvalueofthecostsoftheinterventionarelowerthanthepresentvalueofthesavingsinthefuturecostsoftreatment,rehabilitationandpalliation.

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ofhealthexpendituresshouldbeallocatedtopreventionandpromotionratherthansubsequenttreatment,rehabilitationandpalliation.

iii. Thebalancebetweengovernance,administration,publichealthfunctionsandpersonalservices

Improvingandmaintaininghealthrequiresanumberofactionsbeyondensuringprevention,treatment,rehabilitationandpalliationattheindividuallevel.Population-basedpromotionandprevention(suchaspublichealtheducationcampaigns),forexample,issomethingthatisunlikelytobeachievedwithouttheinvolvementofgovernment.Thesetofadditionalactivitiesthatrequiregovernmentinvolvement(generallyincludingfunding),areoftencalledessentialpublichealthfunctionsorservices.Thesecanbedefinedwithdifferingdegreesofaggregation(e.g.WHO2017band2017c;CDC2017)andgenerallyinclude:diseaseandoutbreaksurveillanceandcontrol;population-basedhealthpromotion;linkingpeopletopersonalservices;developingthehealthworkforce;settingandenforcingstandardsinservicedelivery;andhealthresearch.

Sometimesthegovernanceandadministrativeactivitiesrequiredtokeepahealthsystemfunctioningarealsoincluded,includingdevelopingandimplementingplansforthehealthsector,developingandenforcinglegislationandregulationsasappropriate,interactionswiththecommunityandpromotinginter-sectoralactiontoimprovehealth.Countriesstruggletofindtheappropriatebalancebetweenfinanceforroutineadministration,governanceandtheotherpublichealthfunctionsinthefaceofcontinualdemandforpersonalservicesforindividualpeople.

Scientificallyvalidguidanceontheappropriatebalancetoensureefficiencyisdifficulttofind.Thecost-effectivenessliteratureexaminessomeofthesefunctions,mostlyrelatingtopopulation-basedhealthpromotionorlegislationandregulationtocontrolthingsthatareharmfultohealthsuchastobaccoortraffic(e.g.Ortegonetal.2012;Goetzeletal.2014;Masonetal.2014;Gordon&Rowell2015).Beyondarguingthatmanyinterventionsarecost-effectiveorthatmorehealthpromotionofvarioustypesshouldbeimplemented(e.g.Lobsteinetal.2015),thereislittleguidancewhatpersonalhealthservicesshouldbecuttomakeroomfortheincreasedexpenditureintheseareas.

iv. Inter-sectoralandmulti-sectoralactionIthaslongbeenunderstoodthatmanyfactorsoutsidethehealthsectorinfluencehealth

(suchasincome,education,inequalities,environmentaldegradationandgenderandsocialnorms)andthathealthalsoinfluencesmanyexternalfactors(suchastheabilitytoearnandtogotoschool)(Grossman1976;Cumper1984;Wilkinson1997;CommissiononSocialDeterminantsofHealth2008;Marmotetal.2008).Asaresult,thereisincreasingliteraturearguingthata“wholeofgovernment”or“multi-sectoral”approachisneededtocomplementhealthservicedeliverytoimprovehealthandreducehealthinequalities(e.g.Marmotetal.2008;Carey,CrammondandKeast2014;WHO2014).Thisbuildsonthealreadylargeliteraturearguingfor“inter-sectoral”actions(thehealthministryworkingbilaterallywithothersectors)toimprovehealth(e.g.Dahlgren1994;WHO1997;Adamsetal.2014;Daviesetal.2014).

Thereisalsoagrowingliteraturedocumentingwhereinter-sectoralormulti-sectoralactionshavebeentaken,andhowmorecouldbefacilitated(e.g.Anafetal.2014;Larsenetal.2014;Dawson,Huikuri&Armada2015;deAndradeetal.2015;DeLeeuw&Peters2015).Asyet,however,thereisverylittleinformationthatcanbeusedtoguidegovernmentsindecidingwhetheritismore

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efficienttoallocatemoreresourcestoothersectorsattheexpenseoffinancingthehealthsector.Partoftheproblemisthatactionsoutsidethehealthsectorcanimprovehealthalongsideotheraspectsofhumanwelfare,suchaseducationalattainment,theenvironmentandincomeearningcapacities.Cost-effectivenessanalysiscapturesonlytheimpactsonhealthsoisnotanappropriatetooltoguidesuchbroaddecisions.

Cost-benefitanalysishassometimesbeenusedinthesecases,convertingallbenefitsincludingreducedmortalityandmorbidityintomoneyterms.Livessavedaretranslatedintoamonetaryvalue,frequentlyusingamethodknownasthevalueofastatisticallifewhichisbasedonanassessmentofthevaluethatindividualsplaceonamarginalchangeintheirriskofdeath,mostcommonlyrevealedbythesalarypremiumtheywouldaccepttoworkinamoredangerousoccupation(e.g.Kniesner,ViscusiandZiliak2014;Laxminarayanetal.2014;Viscusi2015).Theapproachhasastrongfollowingforitsuseinvaluinghealthbenefitsassociatedwithinterventionssuchastransportimprovements,andintheassessmentofhealthinterventions.However,theappropriatenessofstatisticallifevaluemethodsarewidelydebatedbyhealtheconomistsanddislikedbyhealthprofessionalswhoconsiderthathumanlifeispriceless(e.g.Alberini&Ščasný2013;Angevine&Berven2014).

Anarrowerperspectiveformultisectoralorinter-sectoralanalysisistodeterminewhichofthepossibleoptions(whicharenotcurrentlybeingundertaken)theMinistryofHealthshouldfocusoninitsefforttoconvinceothersectorstotakeactiontoimprovehealth.Mostoftheexistingliteratureonthesocialdeterminantsofhealthimpliesthatthehealthsectorshouldseektohaveallofthemimplemented,butaminister’stimeisscare,asisthetimeoftheministrystaffandthefundstheywouldhaveavailabletosupporttheseactions.Fromthehealthperspective,itismoreefficienttotargettheactivitiesinothersectorsthatofferthegreatesthealthimprovementsfortheirinvestmentsinmoneyandtime.Theliteratureofferslittleguidanceonthis,withtherecentexceptionofapaperthatsoughttoidentifythehealthandnon-healthinterventionsthathadthebiggestimpactonlifeexpectancyin54lowerincomecountriessince1990basedonaformofregressionanalysis(Hauck,MartinandSmith2016).Interestingly,ofthenon-healthinputs,genderequalityhadthebiggestimpactonlifeexpectancywhileprimaryschoolenrolmentalsohadanimportanteffect.Thisisapromisingstart,butmoreworkneedstobedonetohelpindividualcountriesunderstand,lookingforward,whattypeofspecificinterventionsoutsidethehealthsectorarelikelytoimprovehealththemost.Forexample,mostcountriesreachedclosetouniversalprimaryenrolmentduringtheMDGera,soincreasingenrolmentmorewouldnothavelargeimpactsinthefuture.

v. FinancialprotectionandservicecoverageAsarguedearlier,discussionsaboutdoingtherightthingsinthefaceoffinancialconstraints

inhealthhavegenerallyassumedthattheoutcomeofinterestisanimprovementinhealth.Whenitisrecognizedthatpeoplealsovaluefinancialprotection,thereisanotherefficiencytrade-off:betweenusingscarcefundstoincreasecoverage(and/orquality)withexistinghealthinterventions,therebyimprovinghealth,orimprovingfinancialprotectionbyreducingout-of-pocketpayments.Littleattentionhasbeengiventohowtoaddressthistrade-offtodate.

Arecentexceptionhasbeencalled“extendedcost-effectivenessanalysis”.Itexaminestheimpactofdifferenttypesofinterventionsonhealthoutcomesasinstandardpractice,butalsoconsiderstheirimpactonafinancialprotectionindicatorsuchastheincidenceofimpoverishmentlinkedtoout-of-pockethealthpayments(Verguetetal.2013;Shrimeetal.2015;Verguetetal.2015a;Verguetetal.2015b).Theinformationonbothtypesofoutcomesarepresentedseparatelyratherthanseekingtoputrelativeweightstothetwocomponents.

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Tousethistypeofanalysis,decision-makerswouldneedtoconsiderpairsofoutcomes(healthimprovementandfinancialprotection),andimplicitlyattachweightstotherelativevalueofeachwhendecidingwhattypesofhealthservicestosupport.Therearesomeproblemswiththisapproach.Forexample,itisevenmorecontextualtoaspecificcountrythannormalcost-effectivenessanalysisbecauseout-of-pocketpaymentlevelsandtheirdistributionacrosstypesofhealthservices,andincomesvarygreatly.Theanalysishasalsobeenappliedtohealthinterventionsandnotyettointerventionsaimedspecificallyatreducingoutofpocketpaymentsorstrengtheningpoolingarrangement.However,itisaninterestingdevelopmentthatcancontributetounderstandingatleastsomeofthetrade-offsinvolvedindecisionsaboutefficiencyanddoingtherightthings.8

2) DoingtherightthingsintherightplaceDoingtherightthingsalsorequiresanassessmentofwhichcaresettingsarethemost

efficientforservicestobedelivered.Iftherearenoeffectsonquality,servicesshouldbedeliveredintheleastcostlycaresetting.Commonexamplesofservicesbeingprovidedininappropriatecaresettingsinclude(i)acuteinpatientadmissionswhichcouldhavebeenavoidedorshortenedthroughtheavailabilityofadequateambulatorycare(includingdaycare),home-basednursingcareorsocialcareand(ii)outpatientspecialistoremergencycarevisitsforserviceswhichcouldhavebeenprovidedinprimarycare.Althoughsomeoftheseservicedeliveryandorganizationmodelsarenotyetwidelyavailableinlower-incomecountrieswherepatients(particularlythepoor)sometimesdonotobtainanytypeofformalcareatall,experiencesfrommoredevelopedcountriescanprovideimportantlessonstopreventcommonsetbacksanddesignchallengesinachievinggreaterefficiencyastheselower-incomecountriesdeveloptheirservicedeliverysystems.

Evidenceofavoidablehospitaladmissionsincludeadmissionsforconditionsthatarenotsevereenoughtowarrantanadmission(andthuscouldbetreatedatlesscostlycaresettings)aswellasforambulatorycare-sensitiveconditionswhichcouldhavebeenavertedthroughtheprovisionofadequatepreventativecareinlowerandlesscostlycaresettings.Forexample,thelargevariationinadmissionsforlow-mortalityconditions(e.g.asthmaexacerbation)fromtheemergencydepartmentindicatesthatsomeoftheseadmissionsmaybeunnecessary(Sabbatini,NallamothuandKocher2014;).Inaddition,studiesshowthatcostlyhospitalizationsforambulatorycaresensitiveconditions(e.g.diabetes)couldbeavoidedthroughaccesstoadequatepreventionandearlytreatmentinprimary/communitycare(James,BerchetandMuir2017;Rosanoetal.2013).Thereiswidevariationinageandsex-standardizedhospitaladmissionratesforAsthmaandCOPD(bothambulatorycaresensitiveconditions)acrossOECDcountries(Figure1).AsthmaadmissionratesarehighestforKorea,theUnitedStatesandSlovakrepublicwhileCOPDadmissionratesarethehighestforHungaryandIreland.InEstonia,avoidablechronicobstructivepulmonarydisease(COPD)andasthmaadmissionsconstituted76.9%ofadmissionsforlowerchronicrespiratorydisease,whileavoidablecongestiveheartfailure(CHF)andhypertensionadmissionscomprised84.3%ofadmissionsforhypertensionandotherformsofheartdisease(WorldBank2015).

8Anothermoretechnicalissueisthattheextentofimpoverishmentduetoout-of-pockethealthpaymentsdoesnotreallyreflecttheex-antevalueofthefinancialprotection,butmoretheresultofnothavingsufficientfinancialprotection.

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Figure1:AsthmaandCOPDhospitaladmissioninadults,2013(ornearestyear)

Source:OECDHealthStatistics2015

Aprolongedlengthofstayinhospitalsisanotherindicationofcarethatisnotbeingdeliveredinappropriatecaresettings.Oftenpatientscanremaininthehospitalduetotheneedfornursingorpalliativecare,whichtheyareunabletoaccessinothercaresettings.Forexample,inEstonia,about32.6%ofhipfracturepatientsremainhospitalizedbeyondtheinternationalstandardof28days,whilethepercentageofstrokepatientsremaininginacuteinpatientcarebeyondtheinternationalstandardof56-daysis6.91%(WorldBank2015).Home-basednursingcarehasbeenshowntobemoreefficient(achievingatleastthesamequalityofcareatlowercost)thaninstitutionalcareforthefrailelderly(deJongeetal.2014).Whilethefrailelderlyoftenprefertoremainathome,theycannoteasilytraveltouseoffice-basedprimarycareservices.Thissometimesresultsinhospitalizationthatwouldnothaveoccurredinthepresenceofhome-basedprimarycareservices(e.g.Stall,NowaczynskiandSinha2013).Similarly,theavailabilityofsocialcareservices(institutionalorhome-based)whichprovideservicessuchasassistancewithactivitiesofdailylivinghasbeenshowntosignificantlyaffecttheextentofdelayeddischargesfromhospitals(NationalAuditOffice2016).Inadequatecoordinationwithoralackofaccesstosocialcareleadstoa“defaulttodoctor”phenomenon,whichinturncreatesadditionalpressuresonmedicalstafftime,whichtheyareill-equippedtohandle(Dorell2015).

Surgeryformanyconditionsmaybeperformedinlesscostlydaycaresettingsinsteadofacuteinpatientcaresettings,whileachievingthesameresults.Forexample,almostallcataractscouldberemovedwithambulatorysurgery.Despitetheseopportunities,daycaresurgeriesarenotfullyused,eveninhigh-incomecountries.AlthoughwelloverhalfoftheOECDcountriesnowconductover90%ofcataractsurgeriesindaycaresettings,somestillhaveratessubstantiallylower–31%reportedforPoland,50%forHungaryand72%inAustria(James,BerchetandMuir2017).

Thereisalsoconsiderableevidenceofunnecessaryuseofoutpatientspecialistandemergencydepartmentsinbothlowandhighincomesettings,whereunnecessaryisdefinedasvisitswhichcouldhavebeentreatedinlesscostlylevelsofthesystemwithnoreductioninoutcome.Forexample,inEstoniaarecentstudyshowedthatapproximately20%ofvisitswithoutpatientspecialistsfordiabetespatientsandnearly70%ofvisitsforhypertensionpatientscouldhavebeen

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treatedinprimarycare9(WorldBank2015).Emergencydepartmentvisitsper100populationvariedfrom10to70inOECDcountriesinrecentyearssuggestinginefficiencyinatleastsomecountries.Recordreviewsfromanumberofthesecountriessuggestedthatbetween12%and56%ofthesevisitscouldhavebeentreatedinlesscostlysettingswithoutanydeclineinqualityofcare(James,BerchetandMuir2017).Bypassinglesscostlyprimarycareprovidersformoreexpensivehospital-basedcareisalsoacommonphenomenoninlowandmiddle-incomecountriesincludingChina,Kenya,NamibiaandTanzania(Wuetal.2016;Nshimirimanaetal.2016;Lowetal.2001;Kahabukaetal.2011).

Thedeliveryofcareininappropriatecaresettingsisdrivenbyanumberoffactors.Theliteraturesuggeststhatthesefactorsmayinclude:

• Systemdesignfactors(e.g.organizationalseparationofhealthandsocialcare,weak

gatekeepingfunctionsofprimarycareproviders,lackofaccesstoprimarycareprovidersafterhours,etc.);

• Contractingandfinancing(e.g.weakfinancialincentivesforsolvingmedicalproblemsinprimarycare,strongfinancialincentivesforincreasingthevolumesofoutpatientspecialistandinpatientcare,etc.);

• Clinicalandprofessionalmechanismsandprocess(e.g.lackofadherencetoclinicalguidelinesandpathways);and

• Healthsysteminputs(e.g.shortageofhomenursingproviders,lackoffullyfunctionale-platformforelectronicmedicalrecordsandpatientreferralcoordination)(WorldBank2015).

InEstonia,weakprimarycareincludingweakmanagementofpatientswithchronicdiseases,

lowadherencetoevidence-basedpractice,limitedservicescopeandknowledgegapswereshowntobeparticularlyimportantcontributorstoavoidablespecialistvisitsandhospitaladmissions.Asaresultofthesefactors,lowtrustofprimarycareprovidersamongpatientsmaycontributetoself-referralsandbypassing.InKenya,forexample,patientspreferredtobypassthelesscostlyprimarycaregatekeepersandgodirectlytomoreexpensivehospitalsbecauseofperceivedpoorcommunication,longwaitingtimesandbeingtreatedwithoutdignityandrespectinprimarycare(Nshimirimanaetal.2016).

Adequatecoordinationandcontinuityofcarewithinandbetweencaresettings(e.g.receiptoffollow-upcareafterahospitaladmission)isalsocriticaltopreventingfurtherdeteriorationinpatient’shealth,whichinturnmayrequirerepeatoutpatientspecialistoremergencydepartmentvisits,orreadmissionstoacuteinpatientcare.Thisincludescoordinationwithendoflifepalliativecarewheremanagedcarebypalliativeteamshasbeenshowntoreducehospitalizationrates(e.g.Reyniersetal.2014;Seowetal.2014).

3) Doingthingsright

Oncedecisionshavebeenmadeaboutwhichinterventionsshouldbeavailable,wheretheyshouldbeavailable,andthebalancebetweenexpandingservicesandexpandingfinancialprotection,thenextquestionishowtogetthemostoutofthedifferenttypesofinterventionsforthelowestcost.HerewediscussbrieflytheelementsincludedinTable1under“doingthingsright”.

9Thisindicatorlooksatspecialistvisitsbypatientswhoseconditionsareconsidereduncomplicatedbasedontheprimarydiagnosesmade.Ofthese,visitswereconsideredavoidableifpatientspresentedtoaspecialistnotspecifiedinnationalEstonianguidelines.Ifseveralvisitswerebilledunderthesameclaim(e.g.,pertainingtoonecarecycle),thedecisiononwhetherthesevisitswereavoidablewasmadebasedontheprimarydiagnosiscodeassignedtotheclaim.

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i. HealthServices

ProbablythebestdocumentedsourceofinefficiencyfromTable1relatestomedicineswhichaccountforsomewherebetween20%and60%ofallhealthexpendituresinlowandmiddleincomecountries,andaround18%inhighincomesettings(Niessen&Khan2016).Widespreadover-prescriptionandoveruseofmedication,andincorrectprescriptionanduse,particularlyofantibiotics,iswelldocumented(e.g.Kalyangoetal.2015;Lietal.2012;Hollowayetal.2013;Maoetal.2015;OECD2017).Holloway(2011)andHollowayandDijk(2011)suggestthatglobally,lessthan50%ofpatientsreceiveappropriatemedication(comparedtotreatmentguidelines)fortheirconditions:evenfewerinlowandmiddleincomecountries-40%ofpatientsinthepublicand30%intheprivatesectorsrespectively.

Lowadherencetorecommendedtherapywastesresourcesbecauseofanincreasedneedforsubsequentmedicalcare(Pereiraetal.2014;Ryanetal.2014;Ali,Abou-TalebandMohamed2016;Choudhryetal.2016).Therearemanydeterminants,butlowadherenceismorelikelywithlong-termtherapythanforanacuteepisode,andalsowhereoutofpocketpaymentsformedicinesarerelativelyhigh.Anincreasingliteratureontheaffordabilityofmedicinessuggeststhat,ingeneral,affordabilitydeclineswithlevelsofnationalincomeperhead(e.g.Cameronetal.2009;Cameronetal.2012;Jiangetal.2015;Iyengaretal.2016;Khatibetal.2016).10Inlowandmiddleincomecountries,medicinesfrequentlyhavetobepaidforout-of-pocket,sothelackofaffordabilitytranslatesintoreducedadherencetoafullcourseoftreatmentand,forsomepeople,aninabilitytopurchaseandbenefitatallfromneededtherapy(Luetal.2011;Niesen&Khan2016).

Thelackofaccesstomedicinesthatpeopleneedisalsorelatedtomanycountriespayingtoomuchformedicines.Pricesforthesamemedicinesvarysubstantially,evenacrossEuropeanandOECDcountries,forbothgenericsandbrandnamemedicines(Cameronetal.2012;Simoens2012;Vogler&Kilpatrick2015;OECD2017).11Whilesomevariationsinpricescanbeexpectedgiventhedifferencesacrosscountriesinthesizeofthemarket(population,diseaseprevalence)andtransportcosts,Iyengaretal.(2016)illustratetheremarkablevariabilityinpricesacrossOECDcountries.Asanexample,thepriceforacourseofSofosbuvir(forHepatitisC)rangedfromUS$37,729toUS$64,680,withamedianofUS$42,017.Inastudyof46largelylowandmiddleincomecountries,publicsectorpricesforselectedgenericswerebeen5and17timesabovetheinternationalreferenceprice,withoriginatorbrandsalmost30%higher(Cameronetal.2012).Thegapbetweenthepricespaidandtheinternationalreferencepriceintheprivatesectorwasevengreater.SimilarresultswerefoundmorerecentlyinChina(Jiangetal.2015).Otherstudiesrevealcountrieswherebrandnamepricesarenohigherthantheequivalentgeneric,suggestingthosecountriesarepayingtoomuchfortheirgenericmedicines(Cameron&Laing2010;Vogler&Kilpatrick2015).

Reducingoveruseandinappropriateuse,andreducingthenegotiatedpriceformedicines,freesupresourcesthatcanbereinvestedinwaysthatimprovehealthorfinancialprotection,althoughsometimesthepharmaceuticalindustrylowersthepriceofsomemedicines,butincreasesthepricesofothers.Policiestoreplaceoriginatorbrandpurchaseswithgenericorbiosimilarmedicinesalsoresultinsavings.12Whileanumberofcountries

10Evenifthesecountriescannegotiatelowerprices(notallcan),thedifferenceinpricebetweenricherandpoorercountriesislessthanthedifferenceinaveragehouseholdincomesmeaningthataffordabilityfallswithdeclinesinnationalincomepercapita.11OECD(2017)pointsoutthatpricecomparisonscanbedifficultbecauseofdifferencesinpackagingacrosscountriesaswellasthesecretnatureofsomeofthediscountsthatcountriesnegotiate.12“Abiosimilar(alsoknownasfollow-onbiologicorsubsequententrybiologic)isabiologicalmedicalproductwhichismostanidenticalcopyofanoriginalproductthatismanufacturedbyadifferentcompany.Biosimilars

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havegenericpoliciesofvarioustypes,marketpenetrationismuchlowerthanoptimalfromtheperspectivepurelyoffreeingscarcehealthresourcesbyswitchingfromhighercosttolowercost,equivalenteffect,options(Dylst,VultoandSimoens2014;Hassalietal.2014;OECD2017).Estimatesoftheproportionalcostsavingfromswitchingfromspecificbrandnametogenericmedicinesinclude51%inPakistanand53%inChina(Cameron&Laing2010);between4%and23%inAustria(Heinzeetal.2015)andbetween11%and73%in17lowandmiddleincomecountries(Cameronetal.2012).Indollarterms,Haasetal.(2005)suggestedthattheUScouldsavearound$9billionannuallybyintroducingagenericspolicy,whileMulcahyetal.(2014)suggestthesavingsfromswitchingtobiosimilarswouldbelower-around4%ofcurrentspendingonbiologicals-butstillsubstantialataround$44.2billionfrom2014to2024.

Inefficienciesrelatedtoinfrastructurehavelargelyfocusedonhospitals,andlessfrequentlyonlowerlevelhealthfacilities.Theconsiderablevariationinefficiency(measuredessentiallyastheratioofhealthfacilityoutputstotheirinputs)acrosshealthfacilitieshasbeenextensivelydocumentedincountriesatallincomelevelsthroughtheuseoffrontierproductionfunctionanalysis(e.g.Kirigiaetal.2011;Besstremyannaya2013;Kiadaliri,JafariandGerdtham2013;Duetal.2014;Jehu-Appiahetal.2014;Kittelsenetal.2015).13Inefficiencyinthiscontextgenerallymeansthatthesamethroughputofpatientscouldbehandledwithfewerinputs(comparedtothemostefficienthospitals).Anumberofthestudiesinlowerincomecountrieshaveidentified“over-staffing”ininefficienthospitals(KirigiaandAsbu2013;Kirigia,SamboandLambo2015),whichcanbelinkedtotheinappropriatemixofinputsdescribedinTable1asoneofthecausesofinefficiency.Overstaffingcouldalso,however,beinterpretedasshowingthatthesamestaffandinfrastructurecouldcopewithmorepatients,suggestingunder-utilizationoftheinfrastructureandstaff.

Someofthesestudiesalsoexaminedeconomiesofscaleoroptimalhospitalsize.Frequently,inefficienthospitalsaresmallerthantheirefficientcounterparts,althoughastudyfromSouthAfricashowedthatsomehospitalswere“toolarge”andsome“toosmall”comparedtotheefficientsetofhospitals(Preyra&Pink2006;Kristensenetal.2012;Leleu,MoisesandValdmanis2012;Kirigia,SamboandLambo2015).AstudyfromtwoprovincesinCanadashowedthattheoptimalhospitalsizevariedbyprovincesoitisreasonabletoassumevariationacrosscountries(Asmild,Hollingsworth&Birch2013).InsomeoftheseminalworkonhospitalcostfunctionsandeconomiesofscaleintheUSA,LaveandLave(1984)suggestthatitisdifficulttoidentifyoptimalsizeofhospitalsfromcross-sectionaldatabecausethenatureofsmallandlargerhospitalscanbequitedifferent.Theyarguethattheoptimalsizedependsonthescopeandcomplexityoftheservicesoffered,sothereislittlegenericguidancethatcanbegiventocountriesabouttheoptimalsize.Detailedstudiescontrollingforscopeandcomplexityofserviceswouldneedtobedoneineachsetting.Questionsofpossible“over-staffing”could,however,beexaminedinotherwaysdiscussedmoreinSection4.

Theavailabledatafromlowandmiddle-incomecountriesonhospitaloccupancyratesalsosuggestssubstantialinefficienciescanexistindistricthospitals.Astudyof18countriesin2007reportedanaveragebedoccupancyrateindistricthospitalsof55%,rangingfrom20%to98%(Chisholmetal.2010).InBotswana,districthospitalbedoccupancyratesin2009werebetween40%and61%,butatthesametimethetworeferralhospitalshadoccupancy

areofficiallyapprovedversionsoforiginal"innovator"products,andcanbemanufacturedwhentheoriginalproduct'spatentexpires”,Wikipedia,accessed8February2017.13ThesemethodsarediscussedmorethoroughlyinSection4inrelationtotrackingprogressinimprovingefficiency.

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ratesof143%and222%respectively,suggestingefficiencyandprobablyqualitygainsfromencouragingadmissionsintodistricthospitalsratherthanreferralhospitals(Seitio-Kgokgweetal.2014).

Healthcaredeemedtobeinappropriate,ineffectiveorharmful,sometimescalled“unnecessary”care,hasbeenwidelydocumentedinhighincomecountries(OECD2017;Sainietal.2017;Brownleeetal.2017).Unnecessarytreatmentorinvestigationsarethosewhichhavelittlelikelihoodofimprovingthepatient’squalityordurationoflifeorwhichhavemorechanceofdoingharmthangood.Thelistofcommonformsofunnecessarytreatmentincludesimagingforlowerbackpainandheadaches,antibioticsforupperrespiratorytractinfections,preoperativetestingforlowriskpatients,cardiacimaginginlowriskpatients,inductionoflabour,caesareansectionandsometypesofcancerscreening(Hurley2014;OECD2017;Brownleeetal.2017).

Ineffectivecareincludes:theuseofvitaminandmineralsupplementsaimedatpreventingcardiovasculardisease;antipsychoticprescriptioninolderpatientswhichincreasetheirriskoffalls;orinterventionsundertakenatthewrongtime,ornotatall.Anextremeversionofineffectivecareiscarethatisharmfultopatients,includingmedicalerrors.Ineffectiveandharmfulcarecanleadtosubsequentoutpatientvisits,hospitaladmissionsandotherformsoftreatmentthatcouldhavebeenavoided,andattheextreme,toavoidabledeaths.Reducingallformsofunnecessary,inappropriateandharmfulpatientmanagementsavesmoney(sometimesalsoimprovinghealthoutcomes)thatcanbere-investedintointerventionsthatimprovehealthand/orincreasefinancialprotection.

Theevidenceofover-useisfrequentlycomplicatedbythefactthatpatientsdifferintermsofneed,butformanyoftheseexamples,theevidenceofwidevariationsintheiruseacrosscountries,adjustingforpopulationdifferences,istakentoimplyover-servicinginatleastsomeofthecountries.Forexample,thenumberofCTexaminationsper1000populationvariedfrom31.9inFinland,to254.7intheUSA,with15ofthe28countriesabovetheOECDaverageof131.6(2014data;OECD2017).

ForCaesareansectionandtheuseofantipsychoticsinelderlypatients,therearestandardsofneedthatenableanassessmentofoveruse–15-20%ofdeliveriesforCaesareansand0%foranti-psychotics(reportedinOECD2017).In2014,ratesofdeliveryusingCaesareansectioninOECDcountriesvariedfrom15.3per100livebirthsinIcelandto51.1inTurkey,withanOECDaverageof27.5.Theaveragerateincreasedbetween2007and2014,althoughitfellin12ofthe32countriesforwhichinformationwasavailable(OECD2017,Figure2.2).

Innon-OECDcountries,ratesofCaesareansectionarealsoincreasingandinmanyarealreadyabovetherecommendedrange(Yeatal.2015;Betranetal.2016).Theaverageacrossthecountriesclassifiedas“lessdeveloped”usingtheHumanDevelopmentIndexin2014wasalreadyalmost21%,rangingfrom1.7to56.4per100livebirths(Betranetal.2016).Oftheestimated6.2millionunnecessaryCaesareansectionsannuallyacrosstheworld,50%occurinBrazilandChinaalone(Berwick2017).

Scatteredexamplesofothertypesofunnecessary,inappropriateandharmfuluseofhealthservicesinlowandmiddle-incomecountriesexist.Presumptivetreatmentoffeverswithanti-malarialmedicationinsomecountrieswastesresourcesandisnolongernecessary,giventheavailabilityofinexpensiverapiddiagnostictests(Ochodo,GarnerandSinclair2016).Otherexamplesinclude:theoveruseofmedicineswhenprescriberssellthem(officiallyorunofficially)andthelongerlengthofhospitalstaylinkedtopaymentperday(Chenetal.2014;Gao,XuandLiu,2014;Rahmanetal.2014;Zhangetal.2015b);substantialoveruseofantibiotics,forexample,inchildrenwithacutediarrhoea,inIndiaandThailand(Brownleeetal.2017);andunnecessarycardiacproceduresinBrazilandIndia(Brownleeetal.2017).Thereisnoreasontobelievethatovertreatmentandinappropriate

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treatmentisanylessinlow-incomesettingsthaninhigh-incomecountriesforpeoplewhocanpayorwhosecostsarecoveredbygovernmentorinsurance.

AdverseeventsthatcouldhavebeenpreventedarealsodocumentedinanumberofOECDcountries;thesecanleadtotheneedforadditionaltreatmentandsometimesresultinunnecessarydeaths(OECD2017).Ratesofpreventableadverseeventsinhospitalsacrossthe10studiesreportedbytheOECDrangedfrom1.0%to8.5%.Similarevidencefromlowandmiddleincomecountriesislessreadilyavailable,althoughthereisevidencethatanumberofcountries,includingChina,aredevelopingapproachestoimprovepatientsafetyandconsideringstaffperceptionsoftheproblemasthebasisfordevelopingpossiblesolutions(e.g.Wangetal.2014;Zhouetal.2015).

Under-useofnecessaryservicesexistsalongsideoveruseglobally,inthesamecountry,andeveninthesamepatient(Sainietal.2017).Underuseisprobablymorewidespreadinlowandmiddle-incomecountriesthaninhigh-incomesettings.Indirectevidenceofunderuseisfoundinthefiguresthat1.5millionchildrendieeachyearfromvaccinepreventabledeaths,andanestimated84%ofpre-termdeathsarepreventablewithappropriatecare(Glasziouetal.2017).

Moredirectevidencecomesfromanassessmentofparticulartypesofinterventions.Mostoftheannualestimatedunmetneedforsurgicalinterventionsof320millionprocedureswasinlowandmiddle-incomecountries(Glasziouetal.2017).Forexample,inthe“leastdeveloped”groupofcountriesbasedontheHumanDevelopmentIndex,theaveragerateofCaesareansectionin2014wasonly6%ofalldeliveriescomparedtotherecommended10-15%(rangeacrosscountriesfrom1.4to41.1%).IntheAfricancountriesforwhichdatawereavailable,theaverageratewasonly7%suggestingthatmanywomenwhoneedaCaesareansectionstilldonotobtainthisimportantlife-savingintervention.

Underuseisinefficientinthesensethatbyfailingtoaccessappropriate,low-cost,effectiveinterventions,manyoftheaffectedpeoplewillneedtousemorehealthservicesinthefuture,atalaterstageinthenaturalhistoryofthedisease,leadingtounnecessarydeathsandmorbidity.

Problemswiththehealthworkforcehavebeenwidelydocumented.Inhighincomecountries,insufficientdomesticproductionhasledtotheneedtoimporthealthworkersfromothercountries,whichcanhaveunintendedeffectsonefficiencyifthearrivalsdonothaveagoodcommandofthelocallanguageorculture(Aluttis,BishawandFrank,2014;CrispandChen2014).Inlowandmiddle-incomecountries,thereisasevereshortageofhealthworkers.Only5of49high-needcountriesareachievingtheminimumthresholdof23nurses,doctorsandmidwivesper10,000populationneededtodeliveranessentialsetofmaternalandchildhealthservices(CrispandChen2014;WHO2017e).Theshortageofhealthworkersismuchmoreacuteinremoteandruralareas,atrendnotlimitedtolowerincomecountries(Morrelletal.2014;Abimbolaetal.2015;WHO2017e).

Themixofskillsalsovariesconsiderablyacrosscountries,suggestingpossibleinefficiencyatleastinsomesettings.Forexample,Indiahasaratioofapproximatelyoneallopathicdoctortoeachnurseandmidwife(Rao2014).Althoughthereisnogoldstandard,mostcountrieshaveconsiderablyfewerdoctorspernurseandmidwife–e.g.Indonesiahad0.16;Thailand0.23atthetimeofRao’sIndiastudy(Rao2014;WHO2017f).

Communityhealthworkersbecamepopularinthe1970sinanefforttomoveservicesclosertothepeoplewhoneededthem.Theirnumberdeclinedinthe1980s,butarecentsurgeininteresthasoccurred,linkedtotheneedtogetservicesclosetopeopleandhelpmitigateshortagesinothertypesofhealthworkers(Perry,ZulligerandRogers2014).Anumberof

22

apparentsuccesseshavebeenreported,includingladyhealthworkersinPakistan(Yousafzaietal.2014);Ethiopiaisintheprocessnowofexpandingthenumberanddistributionoftheircommunityextensionworkers(Nejmudinetal.2011).Alargenumberofstudiesoftheseworkers’efficacyhaveproducedinconsistentresults.WHOisdevelopingasetofguidelinesforcommunityhealthworkerprogramsandlastyearcalledforexpressionsofinteresttoundertakesystematicreviewsofthevariousstudiestohelpitinthisprocess(WHO2017g).

Otherproblemsaffectingtheefficiencyofhealthworkersinlowandmiddleincomecountriesarelinkedtomotivation,absenteeism,retentionanddualpractice(Abimbolaetal.2015;Hotchkiss,BanteyergaandTharaney2015,Witteretal.2015).Absenteeismreducesthenumberofservicesthehealthworkercanprovide,whilehighturnoverofstaffrequiresretrainingandrelearningthatalsoreducesefficiency(Daouk-Öyryetal.2014).Limitedinformationisavailableontheextentofabsenteeism–twostudiesfromTanzaniasuggestedsubstantiallostproductivityfromabsenteeism.Kurowskietal.(2004)estimatedthattherewasa26%reductioninhealthworkerproductivitybecauseofunexplainedabsencesandbreaks,whileManzietal.(2012)reportedthat44%ofthestaffwerenotavailableatthetimeofthestudyvisit,andnursesworkedonlyfor57%oftheirallottedtimebecauseofbreakstakenwhileonduty.Comparabledataonthesefactorsarenotpubliclyavailableacrosscountries,soitisdifficulttomakegeneralizationsontheirimportance–althoughhealthministrieswillwanttotrackthesevariablesintheirsearchforgreaterefficiency.

In2010,salariedhealthworkersaccountedforjustover42%ofgovernmenthealthexpendituresglobally,lowerinAfricaandSouth-EastAsiacomparedtoEuropeandtheAmericas(Hernandez-Peñaetal.2013).Intermsoftotalhealthexpenditures,remunerationofhealthworkersinthegovernmentsectoraccountedfor34%whileindependenthealthworkerremunerationaccountedforanother10%globally.Whenfundsareshort,ministriesofhealthfrequentlyprioritisepayinghealthworkers,leadingtoreportsofhealthworkersbeinginpost,butdeprivedoftheinputssuchasmedicinesthattheyneedtodotheirwork(Moszynski2016).However,thereislittlesystematicdataonthistypeofinefficiencyinthemixofinputsacrosscountries.

ii. HealthSystemsandtheHealthFinancingComponentWasteintheformoffraudandcorruptionoccursinhealthsystemsatanumberoflevels(seeOECD2017).Inservicedelivery,patientscanmakewrongfulinsuranceclaimsandproviderscanbillforpatientsorservicestheydidnotprovide.Theopportunitiesareparticularlyhighinprocurement,includingthebiddingprocess,andinthesubsequentdistributionoftheinputsthatwereprocured.Inhumanresourcemanagement,thisextendstotakingbribesinreturnforanofferofemployment,oremployingfriendsandrelativeswhomightnotbethebestpersonforthejob.

ATransparencyInternationalReportquotedbyOECDsuggeststhatathirdofrespondentsacrossthe28participatingOECDcountriesbelievedtheirhealthsystemswerecorruptorextremelycorrupt,withNGOs,themilitaryandtheeducationsystembelievedtobelesscorruptthanthehealthsystem(TransparencyInternational2013;OECD2017).Forty-fivepercentofglobalrespondents(103countries)consideredtheirhealthsystemstobecorruptorextremelycorrupt,andinthiscasehealthfaredworsethanreligiousorganizationsandthemedia,inadditiontoNGOs,themilitaryandtheeducationalsystem.

Arecentstudyoffraudinthehealthsectorsuggeststhatsomewherebetween3%and10%ofhealthexpendituresarelostannually,withameanof5.6%.Extrapolatingtotheworld,corruptionandfraudisestimatedtocosttheworld$426billionannually,resourcesthat

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couldbeusedtoimprovecoveragewithneededhealthservicesandwithfinancialprotection.14

Poorpublicfinancialmanagementpracticesalsolimittheefficiencyofgovernmenthealthsystems.Therearemanyproblems,includingunpredictablebudgetallocations,fragmentationinrevenuestreamsandfundingflows,unpredictableorlatedisbursementfromMinistriesofFinancetolineministriesandfromcentralministriestosub-nationalunits,lowbudgetexecutionrates,andinadequatefinancialaccountabilityandtransparency(Brixietal.2012;Foxetal.2013;Cashinetal.2017).Thesepracticesresultintheavailablemoneynotbeingspent,inpoorspendingbecausemoneyarriveslateorcannotbetransferredbetweenlineitems,orinleakagesbecauseoflimitedtransparency.Toillustrateonlyonepartofthis,recentpublicexpenditurereviewsfrom6Africancountriessuggestunderspendsoftheapprovedbudgetrangefrom$10to$120millionayear(WHO2016).Inpercapitaterms,thistranslatesintolossesofpotentialspendingofbetween$1and3.50annually.Datafromtwocountriesallowedacomparisonofexecutiononsalariesversusothertypesofexpenditure.Almosttheentirebudgetforsalarieswespent,whileexpenditureontheinputsneededtokeepthehealthsystemrunningranataround40%.Additionalsourcesofwasteinasystemarelinkedtoadministrativeformsofadministrativeinefficiencysuchashigherthannecessaryadministrativecosts,bureaucraticredtapeanddelays,complexsystemsthattaketimetonegotiate,andincreasinglyhealthcareprovidersspendingtheirtimeonadministrativeissuesratherthaninteractingwithpatientsorthepopulation(OECD2017).Informationontheextentofadministrativecostsinhealthsystemsisdifficulttofindforlowandmiddle-incomecountriesinparticular.Itexistslargelyforhealthinsuranceadministrationbuteventhen.Forexample,intheearly2000s,socialhealthinsuranceadministrationcostsaveraged3.8%oftotalinsuranceexpendituresin15high-incomeOECDcountries,datacomingfromcountryhealthaccountstudies.Thelowestproportionwassomewhereunder2%inEstonia(rangingfrom1.1to1.9%dependingontheyear)andthehighestaround7%inLuxembourg(yearlyrangefrom6.6to7.0%).Twoofthethreemiddle-incomecountriesforwhichdatawereavailablehadadministrationcostsoflessthan3%oftotalinsuranceexpenditures(GeorgiaandTurkey)butinMexicotheywerealmost17%.

Administrativecostsinprivateinsurance,againusingcountryhealthaccountsdata,wereingeneralsubstantiallyhigher,consistentlyover10%in14ofthe23high-incomecountriesforwhichdatawerecollated,reachingasmuchas30%.Ontheotherhand,inNewZealandtheywereonly5%.Thevariabilityintherangeofadministrativecostsacrosscountriesandtypesofinsurancesuggestssomearesubstantiallymoreefficientthanothersandtherearepossiblegainstobemadefromreducingtheshareofinsuranceexpendituresgoingtoadministration.

Thefinalsourceofinefficiencydiscussedhereisfragmentationwithinsystems.Infinancingsystems,thiscanmanifestitselfintermsofmultiplepayersandpurchasersfordifferenttypesofhealthservicesordifferentpartsofthepopulation.Thisisfrequentlycausedbyfragmentationinfundpools–healthinsuranceco-existingwithgovernmentfinancingandprovision,ormultipleinsurancepoolseachofwhichpurchasesservicesfortheirclients.Suchfragmentationleadstohigheradministrativecostsandhigherpricesthancouldbenegotiatedbyasinglelargepayer.Fragmentationcanalsobeanobstacletoequitable

14Globalhealthspendingin2014wasUS$7.6trillion(WHOGlobalHealthExpendituredatabase).

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coverage-poorerpopulationgroupsarecoveredbyschemesthatarelesswellfundedthanthosefortheformalsectororgovernmentemployees,forexample,soofferasmallerrangeofhealthservices(Tucmeanu2014;Mengetal.2015;Kutzin,YipandCashin2016).

Inbroaderhealthsystems,examplesoffragmentationincludelaboratoriesfortuberculosisseparatetothoseforHIV/AIDS;multipleprocurement,purchasing,distribution,accounting,monitoringandservicedeliverysystems;orpatientsrequiringlongtermcarebeingpushedbetweennursinghomesandhospitalsbecausedifferentpartsofgovernmentpayforthedifferenttypesofcare,andeachseekstominimizetheirowncosts(Sidibé&Campbell2015,Raoetal.2014).Someoftheseissuesarefoundincountriesatallincomelevels(e.g.Hall2015;Lewis2015),butanadditionalfeatureofmanylowandlowermiddle-incomecountriesisthefragmentationassociatedwithinflowsofdevelopmentassistanceforhealthwhereexternalpartnershavechosentoestablishsystemsparalleltothosethatalreadyexistedratherthanstrengtheningandsupportingexistingsystems(e.g.Kienyetal.2014;Panter-Brick,EggermanandTomlinson2014;Gostin&Friedman2015).TheproblemsassociatedwithhowtobestpreservethehealthgainsassociatedwiththeseprogramsarenowbeingfacedincountriestransitioningfromfundingfromGavi,GlobalFundandsomebilateralaidagencies.

Thequestionofwhetherdecentralizationisaformoffragmentationassociatedwithinefficiencyisstillcontroversialdespiteyearsofexperience.Decentralizationpolicieshavebeenwidelyimplemented,notjustinhealth,withthegoalofimprovingoneormoreofthefollowing:efficiency,servicequality,management,responsivenesstolocalneedsandequity(Saltman,BankauskaiteandVrangbaek2004).Thereismixedevidence.Somestudiesfindthatithasbeenassociatedwithincreasedaccountabilityofgovernmenttocitizens,orwithimprovementsinmanagementthatthenresultedinhighercoveragewithhealthservicesandimprovedhealthoutcomes(Alves,PeraltaandPerelman2013;Loubiereetal.2009;Samadietal.2013)Otherstudiesshowlittleimpactofhighercostsandincreasedinequalitiesbetweenlocalgovernmentunitsduetodifferencesinfiscalcapacity(Azfar,KähkönenandMeagher2001;Atkinson&Haran2004;Saltmanetal.2007;Langenbrunner,XuandChu2016).Therehavealsobeensuggestionsthatrenewedcentral-levelfinancingwouldimproveequityandefficiencyindecentralizedsettings(Langenbrunneretal.2016).

Oneofthereasonsforcontradictoryresultsisthatdecentralizationtakesmanyforms,andcanhavemanycomponentseachrequiringlocalgovernmentcapacity–e.g.raisingrevenue,planning,purchasingorprovidingservices,monitoringandevaluation,audit.However,thetopicremainscontentiousandwillbediscussedatthisForum.

V. IdentifyingthemostimportantsourcesofinefficiencyNotallcountrieswillhaveeachofthesourcesofinefficiencydescribedinTable1,andeven

wheretheyexist,theirrelativeimportancewillvaryacrosssettings.However,someinefficiencyexistsineverycountry–everycountrycouldachievemorewiththeavailableresources(WHO2010a).Thereislittleglobalguidanceavailableonhowtoidentifythemostimportantsourcesinaspecificsetting,whichiswhythissectionhasspentsometimeexplainingthecommoncausesofinefficiencyandtheirsources.Thiscanbeastartingpointforcountriesthinkingthroughwhichonesarethemostimportantintheirsettings,andwhichtheywouldtacklefirst.Indicatorsofinefficiencycanhelpprovideevidenceinsupportofdiscussionsaboutthemostimportantsourcesofinefficiency

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andsubsequentpolicydevelopment,sotheyarediscussedinthenextsection.

VI. Measuringandmonitoringinefficiency

Therearetwobroadapproachestomeasuringinefficiencyinhealthsystems.Thefirstseekstoobtainasinglescoresummarizingtheefficiencyofacountry’sentirehealthsysteminasimilarwaytothemeasurementofhospitalorhealthfacilityefficiencydescribedearlier.ThesecondapproachfocusesonmeasuringefficiencyrelatedtothedifferentcomponentsofahealthsystemandthepossiblesourcesofefficiencydescribedinSection3.Theformerwecallmacro-efficiencyandthelatter,micro-efficiencyanalysis.Theyarediscussedbrieflyinturn.

1) Macro-efficiencyFigure1depictstherelationshipbetweenlifeexpectancyatbirthandtotalhealthexpenditure

percapitain2014.Lifeexpectancyriseswithhealthexpenditurepercapita,thoughatadecreasingrate.Thereisalsoconsiderablevariabilityaroundtheaverageregressionlinewithcountrieswithsimilarexpendituresachievingverydifferentlevelsoflifeexpectancy.Thistypeofanalysis,sometimeswithlevelsofattainmentonotherhealthindicators(e.g.maternal,childorinfantmortality),orwithlevelsofcoverageonkeyinterventions(e.g.withchildhoodimmunizations)ontheverticalaxis,hasbeenusedasevidencethatsomecountriesaremoreefficientthanothersintranslatingexpenditureintohealthoutcomesorcoverage(WHO2010a;WHO2016).

Figure1:Lifeexpectancybyhealthexpenditurepercapita,2014

Manyfactorsotherthanhealthexpendituresobviouslycontributetotheobservedvariationsinlifeexpectancy,includingdifferencesininitialdiseaseburden,populationagestructuresanddistribution,coststructures,availabilityofinfrastructureandhistoricalpatternsofspendingon

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Life

exp

ecta

ncy

Log health expenditure per capita

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healthandsocialservices.Withoutcontrollingforthesefactors,itisnotpossibletostatecategoricallythattheobserveddifferencesarelinkedtodifferencesininefficiency.

Moreformalmethods(mostcommonlydataenvelopmentanalysis(DEA)andstochasticfrontierproductionfunctionanalysis(SFA))havebeendevelopedtomeasuretherelativeefficiencyofcountryorsubnationalhealthsystems(orhealthfacilities)andtocontrolfor,orexaminetheimpactof,possibledeterminantsofoutcomeinadditiontoexpenditure(e.g.Hollingsworth2003,2008,2016;Joumardetal.2010;Pang2005).Essentially,theyshifttheregressionlineuptothetopofthescatterplot,obtainingafrontierofthemostefficientperformers,giventheirlevelsofexpenditure(andotherdeterminants).Thoseonthefrontierarethemostefficient(generallygivenascoreof1),andthosebelowitaredeemedinefficientcomparedtothebestperformers,withascorebetween0and1dependingonhowclosetheyaretothefrontier.15

In2016,Hollingsworthidentifiedover400studiesapplyingthesetechniquestohealthissuesinthelast30years(DEAmorefrequentlythanSFA).Themethodswereinitiallyappliedtohealthfacilities,particularlyhospitals,butsincetheappearanceofthe2000WorldHealthReport,whichrankedhealthsystemefficiencyacrosscountriesusingSFA,theyhavebeenwidelyappliedtostudiesofthecomparativeefficiencyofhealthsystems(WHO2000,Sunetal.2017).

Overtime,thetechniqueshavebecomeincreasinglysophisticatedintheirtreatmentofrandomnoiseintermsofmeasurementerrors,samplenoise,specificationerrors,cross-countryheterogeneityandreturnstoscale(seeOlesen&Petersen2016;Greene2004&2008;Hamidi&Akinci2016).DEAcannowdealwithbothmultipleinputsandoutputs,andrecentstudieshaveevenmergedDEAwithSFAfordifferentstagesoftheanalysisofthedeterminantsofinefficiency(e.g.Berengueretal.2016).Inessence,however,theyalltreatdeviationsfromthefrontierthatarenotexplainedbythedifferencesininputsasinefficiency,thenseektounderstandthefactorsotherthanhealthsysteminputslinkedtothevariationsinefficiency.

Thereareanumberofproblemswiththisformofmacro-analysisfromapracticalpolicyperspective.First,theefficiencyscoresandrankingsaresensitive,sometimesverysensitive,tothemodelspecificationandthedatausedforinputs,outputsanddeterminants(Frogner,Frech&Parente2015;Gearhart2016a&2016b).Whencountriesaregroupedintodifferentcategoriesofperformers,thereismoreconsistency–e.g.somecountriesmostlyfallinthegroupwiththehighestefficiencywhileothersgenerallyfallintheleastefficientgroupregardlessofthemodelspecification(althoughthereisstillsomemovementbetweengroupsdependingonthemethodsused)(DeCos&Moral-Benito2014;Medeiros&Schwierz2015).Inthiscase,thepolicyfocuscanbeonthecountriesthatareconsistentlyfoundtobeinthelowestefficiencygroupalthoughlittlecanbesaidaboutcountriesthatmovebetweengroups.

Secondly,themodelsassumethatcountriesonthefrontierareefficient,whenmoremicro-levelworksuggestsformsofinefficiencyexistinallcountries.

Thirdly,noneofthemodelsasyetcapturethelagsthatmustbeimportantintranslatinginputsintooutputsandoutcomes.Thisisnotsimplyaquestionofusingpanelratherthancross-sectionaldata.Itrelatestotheassumptioninbothcasesthatexpendituresineachgivenyearproducehealthbenefitsinthatyearratherthanoveraperiodofyearsinthefuture.Tocapturethis,modelswherecurrentoutcomesareafunctionofhealthexpendituresinpreviousyearsaswellasthisyearwouldberequired.

Fourthly,themethodsandapproachesareverydifficultforthetypicalpolicy-makertounderstand,sotheresultsaresometimesdistrusted(Hollingsworth2016).

15Differentalgorithmsarepossibleinthisprocess–e.g.inDEA,efficiencycanbemeasuredintheoutputspacebymovingverticallyuptothefrontier,intheinputspacebymovinghorizontallytothefrontier,orasamixofthetwo.

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Finally,andperhapsmostimportantly,theresultsrarelyhelppolicy-makersidentifyhowtheycanimproveefficiencyorpoliciesfordoingso.Thisisbecausethevariablesthatcanbeenteredintothemodelstoexplaindifferencesinefficiencyneedtobeavailableandcomparableacrosscountries.TypicalexamplesaretheGinicoefficientofincomeinequalityandaveragelevelsofeducationalattainment,variablesthatarenotunderthedirectcontrolofthehealthsector.

Thesemodelscan,however,beausefulstartingpointtothinkaboutwhichcountryhealthsystems(orwithinacountry,whichsubnationalsystems,hospitals,orprimarycarefacilities)seemtosufferfromthemostinefficiency.However,tounderstandthecausesofinefficiencyandthendevelopsolutions,moremicro-variablesneedtobeexplored.

2) EfficiencyincomponentsofthehealthsystemTable2reportssomeoftheindicatorsproposedintheliteraturethatdescribeaspectsofthe

causesofinefficiencydescribedinTable1,withthesourcesalsoindicated.

Table2:PossibleEfficiencyIndicatorsfortheSourcesofInefficiencyinTable1

Domainofinefficiency

Indicatorssuggested Source

Doingthewrongthings

Shareofpublicspendinginremoteareas,as%ofGGHE

WBFSD;Tandon&Cashin(2010)

Shareofpublicspendingthatgoestothepoorest40%ofthepopulation

WBFSD

Shareofnationalspendingonpharmaceuticals Smith&Nguyen(2013)

%offundingallocatedaccordingtoastrategicplanforthehealthsectororaccordingtodistributionofburdenofdisease

Tandon&Cashin(2010)

Doingthingsinthewrongplace

Shareofpublicspendinginprimarycare,as%ofGGHE

WBFSD;Yip&Hafez(2015)

Numberofoutpatientvisitsattertiaryhospitalsper100population

OECD(2017)

Shareofavoidablehospitaladmissionsforcertainconditions(asthma,COPD,diabetes,hypertension,CHF)

Marshall,LeathermanandMattke(2004)

Shareofavoidablespecialistvisitsforcertainconditions(diabetes,hypertension)

WorldBank(2015)

Delayeddischarges/returntousualplaceofresidence(hipfracture,stroke)

CompendiumofPopulationHealthIndicators–NHSDigital(2015);OECD(2017)

%ofsurgeriesconductedinambulatorysettings(cataract,tonsillectomy,inguinalherniarepair,cholecystectomy,laparoscopic)

OECD(2017)

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SpendingBadly:Inputs

Medicines

Under-utilizationofgenericsorpayingtoomuchforanyspecificmedicine

PercentageofdrugspurchasedbytheMoHthataregenericorgenericsmarketsharesbyvolume(%)

WBFSD;OECD(2017);Heredia-Ortiz(2013)

Averagemedicinecostperencounteroraveragenumberofmedicinesprescribedperencounter

WHO/INRUD

Useofineffectivemedicines,thewrongmedicines,orusingthematthewrongtime

Cholesterol-loweringdrug&antidepressantconsumption

OECD(2017)

Percentageofprescriptionsinaccordancewithclinicalguidelines

WHO/INRUD

Overuseorunnecessaryuse

Percentageofencounterswithanantibioticorinjectionprescribed

Desalegn(2013);Hu,Liu&Peng(2003);Wangetal.(2014);Ferreiraetal.(2013)

Meannumberofdrugs/prescription WHO/INRUD;Bashrahil(2010);Ferreiraetal.(2013)

PercentageofmedicinesprescribedfromanEssentialMedicineListorformulary

WHO/INRUD;Desalegn(2013)

Personnel

Inappropriatemixbetweendifferentcadres;locatedinthewrongplaces;demotivatedworkerswithlowproductivity;poorqualityofcareprovided.

Averageratioofcommunityhealthworkertopopulation

McIntyre&Meheus(2014)

Absenteeismrateforhealthworkers WBFSD,Tandon&Cashin(2010);Heredia-Ortiz(2013);Okweroetal.(2010)

Healthworkerdensityinurbanvsruralareas Yip&Hafez(2015);Lannes(2015)

Ratioofdoctorstototalhealthpersonnelortonursesandmidwives

Heredia-Ortiz(2013)

Densityofphysicians/nurses(per1,000population) Heredia-Ortiz(2013);Lannes(2015)

Staffturnoverorretentionofhealthworkforce Dieleman&Harnmeijer(2006);Lannes(2015);Meessen,Soucat&Sekabaraga(2011)

Infrastructure(e.g.healthfacilities)andequipment

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Inappropriatehealthfacilitysize,particularlyhospitals,foroptimalefficiency

Numberofhospitalbedsper100,000 OECD(2010);Smith&Nguyen(2013)

Bedoccupancyrate WBFSD;Heredia-Ortiz(2013);WHO(2010)

Turnoverrateforacutecarebeds OECD(2010)

Wrongscaleandscopeofhospitals Heredia-Ortiz(2013);WHO(2010)

Numberofadmissions,discharges

WHO(2010)

Underorover-capacityinhealthfacilities

NumberofconsultationsperdoctorOrnumberofoutpatientvisitsorinterventionsprovidedperfulltimeequivalentworkerorperfacility

OECD(2010);Dieleman&Harnmeijer(2006)

AveragePHCserviceutilizationrate Tandon&Cashin(2010)

Equipmentthatispurchasedandcannotberepairedorisnotusedoptimally

Inappropriatemixofinputs:e.g.healthworkersbutnomedicinesorothermedicalproducts

Availabilityofessentialmedicineslistorkeymedicinestopractitioners

WHO/INRUD

SpendingBadly:OutputsandOutcomes

Healthservices

Inappropriateandunnecessarycare

Averagelengthofstay(ALOS)forhospitalvisitsorforspecificadmissions(followingAMI,cancer)

WBFSD;OECD(2010);AustraliaNationalhealthperformancereporting;Heredia-Ortiz(2013);Cylus,Papanicolas&Smith(2013)

Relativestayindex(numberofdaysspentinhospitalforselecteddiagnostic-relatedgroups(DRGs)dividedbytheexpectednumberofdaysspentinhospital)

Davisetal.(2013);AustraliaNationalhealthperformancereporting

Caesareansectionrates OECD(2017)

MRI/CTscanexamsper1,000population OECD(2017)

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Averageconsultationtime WHO/INRUD

Underuse Proportionofinfantsthatdidnotreceive3dosesofDTP3immunization

WHO/WorldBank(2015)

ProportionofHIVpositiveadultsandchildrenwhodonotreceiveantiretroviraltreatment

WHO/WorldBank(2015)

Proportionofpregnantwomenwhodonotreceive5antenatalcarevisits

WHO/WorldBank(2015)YipandHafez(2015)

Proportionofpeoplewithhypertensiontreatedandcontrolled

Glasziouetal.(2017)

Medicalerrorsandlowqualitycare

Unplannedreadmissions Davisetal.(2013);OECD(2017);AustraliaNationalhealthperformancereporting

30daymortalityrate(hospitalorforspecificconditionssuchasAMIorIschemicstroke)

Davisetal.(2013);Husseyetal.(2004)

Rateofhealthcareassociatedinfections AustraliaNationalhealthperformancereporting

Postoperativepulmonaryembolism(PE)ordeepveinthrombosis(DVT)inhipandkneesurgeries

OECD(2017)

Postoperativesepsisinabdominalsurgeries OECD(2017)

Obstetrictrauma,vaginaldeliverywith(orwithout)instrument

OECD(2017)

Foreignbodyleftinduringprocedure OECD(2017)

Incidencerateforpertussis,measles,andHepatitisB(vaccine-preventablediseases)

Husseyetal.(2004)

Maternalmortality,childmortality Sajedinejadetal.(2014)

SpendingBadly:HealthFinancingandHealthSystemOrganization

Waste,corruption,fraud.

Healthbudgetexecutionrates WBFSD

Percentageofmedicinesandothers(incl.IVfluids)destroyedduetoexpiration,breakageand/orinappropriatestorageconditions

WBFSD;Heredia-Ortiz(2013);Okweroetal.(2010)

Degreeofcorruption(internationalbenchmarknotspecifictohealthsector)

Tandon&Cashin(2010)

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Arehealth-specificanti-corruptionpoliciesinplace? WBFSD

Informalpaymentsinhealth,as%oftheOOPexpenditure

WBFSD

%ofgovernmenthealthfundingthatreachesservicesdelivery

TandonandCashin(2010)

Inefficiencyinraisingrevenuesforhealth,particularlywhenrevenueraisingforhealthisindependentfromgeneralgovernmentrevenuecollection.

Governmentrevenueas%ofGDP TandonandCashin(2010)

ElasticityofhealthexpenditurewithrespecttoGDP TandonandCashin(2010)

Healthbudgetas%oftotalgovernmentbudget TandonandCashin(2010)

Internationalhealthassistanceas%oftotalandgovernmenthealthspending

TandonandCashin(2010)

Fragmentationinthesystem:inpooling,butinthebroaderhealthsystem

Arethereadequatedonorcoordinationmechanismstoalignexternalfinancingwithgovernmentpriorities,processes,andthehealthbudget?

WBFSD

Howareproviderspaidanddoesthepaymentmodalitycreateincentivesforcostcontainment,qualityofservicedeliveryorprovisionofservicestospecificgroupsofpeople?

WBFSD,McIntyreandMeheus(2014)

Administrativeinefficiency:higherthannecessarycostsfortheservicesoffered,includinginhealthinsuranceagencies.

Healthsectoradministrativecost,as%ofgovernmenthealthexpenditure

WBFSD

Whattypeofbudgetingprocessisusedinthecountry,e.g.,input-basedoroutput-based,andhowdoesthisaffectproviders’/purchasers’abilitytoallocateresourcestobeinlinewithpriorities?

WBFSD;TandonandCashin(2010)

The list is long, and certainly not exhaustive. For example, an indicator of the extent ofunderuseofneededservicescouldbedefinedforalldiseasesandtypesofinterventionsfocusingonthatdisease,suchasscreeningforcertaintypesofcancers,andsubsequenttreatment.

Someoftheindicatorssuggestedintheliteraturearealsodifficulttoobtain,particularlyinlower income countries, andwould require additional expenditures to establish andmaintain thesystemstocollectandanalysethemroutinely,forexample:theextentofinformalpayments(surveys);share of public expenditures going to the poorest 40%of the population (utilization surveyswithinformationonhouseholdexpendituresorincomes);percentageofmedicinesprescribedaccordingto national guidelines (surveys or observation of encounters);wrong scale and scope of hospitals(production function analysis based on intense data collection); and degree of corruption (publicexpenditurereviewsorspecialformsofaudit).

Othersaredifficulttointerpretbecauseamoveinonedirectiondoesnotunequivocallymeananincreaseordecreaseinefficiency.Theymaystillbeuseful,however,andinternationalyardsticksderivedfrommulti-countrycomparisons,particularlythoseofsimilarcountries,couldbeusedtomake

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thesejudgements.16Examplesarehealthworkerdensity,distributionofhealthworkerstoruralareas,averagelengthof inpatientstay,andtheshareofnationalspendingonprimarycareormedicines.Eventhoughitispossibletodetermineifacountry’sscoresarehigherorlowerthanthatofsimilarcountries,itisdifficulttobesureifmoreorlessisgoodorbad.Theanalysisismostusefulwhenthereareoutliers–wherethevariableinquestioninonecountryissubstantiallyhigherorlowerthaninothercountries.

Anothersetisreadilyeasytointerpretandmostcountriesshouldbeabletomeasurethemwithoutgreatadditionalexpense.Fromthevariables inTable2,twelvefall intothiscategory.Thisdoesnotmeanthattheyarethemostimportanttomonitororthatthesetofvariablesisthebesttounderstandtheoverallefficiencyofthesystem,butonlythattheyshouldbeabletobemeasuredroutinelyincountriesatallincomelevels.Examplesincludeabsenteeismratesforhealthworkers,theproportionofpregnantwomenwhodonotreceive4antenatalconsultations,infantcoveragewith3doseDTP,post-operativesepsisinabdominalsurgery,Caesareansectionrates,budgetexecutionratesand bed occupancy rates. Higher-income countries with established measurement systems canobviouslymonitoramuchgreaternumberandothercountrieswillchoosetodevelopthesystemstomonitorotherindicatorsdependingontheareasofinefficiencytheychoosetotackle.

Theadvantageofthemicro-efficiencyoverthemacro-efficiencyapproachisthattheindicatorsareeasierforpolicy-makers,healthworkers,patientsandthepopulationtounderstand.Theyarealsodirectlyrelevanttotheanalysisofthemostimportantcausesofinefficiencyinacountry,whichinformsthepolicydebateaboutwhattodoaboutthem.

Thedownsideofusingadashboardofindicatorsisthatitcanbedifficulttounderstandifasystemisgettingmoreorlessefficientunlessallindicatorsimproveatthesametime.Eventhen,itwillnotbeclearifeffortstoimproveefficiencyinonearearesultinlowerefficiencysomewhereelse,inareasthatarenotbeingmeasured.

Weobservethatfewcountrieshavedevelopedaspecifiedsetofindicatorswithwhichtheytrackefficiencyandimprovementsovertime.Itisimportantthattheydoso,perhapsusingTable2asastartingpointandtakingintoaccounttheircapacitytomeasureandanalyseandthecostsofobtainingeachvariable.Theremaywellneedtobedifferentsetsfordifferentactors–e.g.ahospitalmanagermayrequireasetofrelativelyspecificindicatorswhiletheMinisterofHealthmightrequireabroadersetthatsummarizesefficiencyacrosstheentirehealthsystem,butincludeslessdetailontheindividualcomponents.Withoutanappropriatesetofindicators,itwillbedifficulttodetermineifthestrategiestoimproveefficiencyhavebeensuccessful.

VII. StrategiestoimproveefficiencyOncethemajorsourcesofinefficiencyhavebeenidentified,thenextstepistodevelopand

implementstrategiesforincreasingefficiency.Understandingthereasonswhyinefficienciesexistcanhelptoidentifyappropriatestrategiesforreducingthem,sointhissectionweturntoavailabletechnicalsolutions.Thelistofpossiblesolutionsdrawsonpoliciescommonlyputinplaceinresponsetothereasonswhyinefficienciespersist.Remarkably,thereislittleknownaboutwhat

16TheWorldBankGroupisintheprocessoftryingtoprovidetherangeofvaluesformanyoftheseindicatorssocountriescandeterminewheretheyareinrelationtoothercountries.

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worksatthesystemlevelandthesectionconcludesbyidentifyingsomeofthekeyunresolvedandcontroversialissues.

1) TechnicaloptionsforimprovingefficiencyTable3buildsonTable1,suggestingreasonsforeachpossiblesourceofinefficiency,andsolutionsthathavebeenidentifiedintheliteraturebasedonconsiderablecountryexperience.Solutionsdirectlylinkedtohealthfinancingarehighlightedinbold.Thesesolutionshavebeendrawnfromanextensivereviewoftheliteraturereportingonwhattypesofinterventionshavebeenimplementedwiththeintentionofimprovingefficiency.Thelistis,however,unlikelytobecomprehensive–theliteratureisvastanditispossiblesomeoptionshavebeenmissed;somestrategiesmighthavebeenimplementedatcountrylevelwithoutaformalevaluation;andotherevaluationsmightnothavebeenpublishedormadepublic.Readersareencouragedtoindicatetotheauthorsotheroptionsthatshouldbeincludedinanylistthatcountriescanusetoidentifypossiblesolutionstotheirproblems,particularlythoseforwhichthereisgoodevidencethattheyworkordonotwork.

Table3:PolicyOptionsforImprovingEfficiency17

SourceofInefficiency CommonReasonsforInefficiency

PossibleSolutions

1. Doingthewrongthings:Highcost,lowimpactinterventionsfundedattheexpenseoflowcost,highimpact;inappropriatemixbetweenlevelsofcare;prevention,promotionversustreatment;publichealthandgovernancefunctionsversuspersonalservices;mixofintersectoralactionsorintersectoralversushealthservices

Difficulttoobtainthenecessarytechnicaldatatoguidedecisions;noclearyardsticksfordecidingwhatisenough(preventionvstreatment;publichealthandgovernancevspersonalservices);political,healthworkerorcommunitypreferences(typesofinterventions,levelsofcare);financialinterests(littlepreventionfundedbyinsurance).

Increasedcountrycapacitytogenerateandusekeyepidemiologicinformationonburdenofdiseasetoguidedecisions;furtherdevelopmentofmethodsforassessmentofintegratedpackagesandforincorporationoffinancialprotection;patientempanelment;gatekeeping;increasedservicedeliverycapacityandqualityatlowerlevelsofcare;healthtaxesandfinancialincentivesforpersonalactiononprevention;civilsocietyorganizationsandprofessionalassociationspromotingadequateproviderbehavior.

17ThisTablebuildsonanapproachtakeninWHO(2010).

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2.Doingthingsinthewrongplaces:Inappropriateuseofhigherlevelversuslowerlevelsettingsforinpatientandoutpatientcare(includingdaysurgery),overuseofhealthversussocialcareandinstitutionalizedversushome-basedlong-termcare.

Insufficientinformationontheefficiencyofdeliveryofpackagesatdifferentlevels;organizationalseparationofhealthandsocialcare,weakcoordinationofcare,includingreferralsystems,poorqualityatlowerlevelsofcare,financialincentivesacrosscaresettingsthatpromotecareathigherlevels.

Methodstoassesstheefficiencyofpackagesdeliveredatdifferentlevelsofthesystem;coordination/integrationofhealthandsocialcare;patientempanelmentandgatekeeping;clinicalpathways;increasedservicedeliverycapacityandqualityatlowerlevelsofcare,includingITinnovationse.g.,tele-medicine,e-consultations);providermanagementnetworks(e.g.,primarycarenetworks);appropriateblendingofpaymentmethods.

3. Spendingbadly:highercostinputschosenorinputsnotachievingtheirmaximumpotential

HealthServiceDelivery1. Medicines:

a) under-utilizationofgenericsorpayingtoomuchforanyspecificmedicine;

b) useofineffectivemedicines,thewrongmedicines,orusingthematthewrongtime;

Nogenericspolicy;provider/patientperceptionsthatgenericsarepoorquality;financialincentivestoprescribebrandedmedicines;poorpurchasingpracticesorcorruption;lackofknowledgeofinternationalprices;highmark-upsortaxesonmedicines.

Inadequateregulation/administrationtocontrolsubstandardmedicines;poorknowledgebyproviders;demandorlowadherencefrompatients.

Genericspolicyandessentialmedicineslistforhealthfacilitiesaccompaniedbyqualitycontrols;informationongenericstoproviders/populationwithqualitycontrolsystem;financialincentivesforprescribinggenericsandnotbrandedmedicines;activepurchasingwithappropriatecompetitivebidding;centralizedprocurement;multi-yearprocurementframeworks;increasedtransparencyinpurchasesandtenders;zerotaxesonessentialmedicines;monitoringandpublicationofmedicineprices.Increasedgovernmentcapacitytoregulatemedicinestoensuresafetyandquality;informationexchangeforprovidersandthepopulation.

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c) overuseorunnecessaryuse.

Financialincentivestoprescribeandsellmore;industrypromotion;consumerdemand.

Appropriatefinancialincentives–e.g.separateprescribingfromsales;increaseinformationtoprovidersandpatients;regulateandenforcestandardsforindustrypromotion.

2. Infrastructure(e.g.healthfacilities)andequipment:a) Inappropriatehealth

facilitysize,particularlyhospitals,foroptimalefficiency;

b) Underorover-capacityinhealthfacilities;

c) Equipmentthatis

purchasedandcannotberepairedorisnotusedoptimally.

Lackofinformationaboutappropriatesize;patientschoosetogotohigherlevelsofcare.

Toofewfacilitiesforthedemandormaldistribution;patientschoosehigherlevelfacilities–overandundercapacitycoexist;poormanagement;financialincentivesforhighadmissionandlonglengthofstay.

Donationsofequipmentthatcannotbeservicedlocallyorwheresuppliesandmaintenancearetooexpensive;poorprocurementpractices;corruption.

Monitoringefficiencyofhealthfacilities;gatekeeping;increasedservicedeliverycapacityandqualityatlowerlevelsofcare.

Masterplansforstreamlininginfrastructure;gatekeeping;increasedservicedeliverycapacityandqualityatlowerlevelsofcare;appropriateblendinganduseofpaymentmethods;improvedmanagementcapacitywithappropriateincentives.

Refusalofdonationsofnewtechnologywherebudgetswillnotbeabletopaysuppliesandmaintenance;improveddonorpractices;improveprocurementpracticesandcontrolsofcorruption.

3. Healthservices:a) Unnecessarytests,

procedures,orunderutilizationofthesecomparedtoneed;

b) medicalerrorsandlowqualitycare.

Poormanagement&control(perhapslinkedtoinsufficientmanagementresourcesorinadequateinformationonpatterns);financialincentivestoover-service;defensivemedicine.

Inadequateproviderknowledge;insufficientdatacollectionoruseofdatabymanagers;noincentivesforquality;poorinfrastructure;lowqualityincludinghygiene;poorcompliancewithinfection

Improvemanagementandavailabilityanduseofdata;clinicalguidelines;financialincentivestopreventoveruseandtopromotequality.

Continuoustrainingforproviders;improveddataavailabilityanduse(e.g.clinicalaudits);clinicalguidelines;incentivesforquality(contracting,providermonitoring,paymentsystems,

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preventionandcontrolstandards.

complaintsystems);investmentininfrastructure,enforcementofminimumstandardsofservicequalityincludingmandatoryinspectionsandclosedownofunsafefacilities;accreditation.

4. Personnel:a) Inappropriatemix

betweendifferentcadres;

b) Locatedinthewrong

places;

c) Demotivatedworkerswithlowproductivityandpoorqualityofservices(e.g.lowvisitsperhealthworkersperday,absenteeism).

Poorplanning;inappropriatetrainingintakes(canbelinkedtostudentdemand);outmigrationorlackofretentionofsomecadres;resistancebyvariouscadrestolessskilledpeopletakingmoreresponsibility.

Incentivesinsufficientforsomelocations;

Poorwagesandincentivestructures;poormanagementandsupervision;poorworkingconditions;recruitmentandpromotionnotbasedonmerit.

Healthworkforceplanningbasedonlabourmarketassessmentandlinkstotrainingintakes;HRHtrainingandrecruitmentalignedwithbroaderhealthsystem’sobjectives;strategiesandincentivestorecruitandretainkeyhealthworkersinremoteandunderservedareas;skill-taskmatching,includingtaskshifting;

Revisesalarystructuresandincentivesforunderservedlocations.

Salaryandincentivestructuresinlinewithsystemobjectives;regulationofdualpractice;improvedmanagement,supervisionandworkingconditions;multi-disciplinaryteams,eliminate“cronyism”inhiringandpromotion(establishclearprocessforhiring,deploying,andpromotionofhealthpersonal).

5. Inappropriatemixofinputs:e.g.healthworkersbutnomedicinesorothermedicalproducts.

Poormanagementorbudgetingpractices;inflexiblecontractswithworkers.

Improvedmanagementofinputsforservicedelivery;budgetpracticesprovidinggreaterflexibilityofuseofinputs.

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7. Waste(includingexpiredmedicines),corruption,fraud.Lowbudgetexecutionratesareaformofwastebecausetheavailablefundsarenotused.

Poorprocurement,inventorycontrolpractices;poorstorageandtransport;lackoftransparencyandaccountabilitywithappropriatemanagement,auditandlegislation;inadequatesupervision;poormanagementorinflexiblelineitembudgetsleadingtolowbudgetexecution(canalsorelatedtodelayeddisbursementfromministriesoffinance).

Improvedprocurement,supplychainmanagement,inventorycontrol,storageofsuppliesofdrugs;improvedregulationandgovernancewithsanctionsforcorruptionandfraud;codesofconduct;improvedpublicfinancialmanagementincludingbudgetpracticesandresourcetrackingandaccountability.

8. Inefficiencyinraisingrevenuesforhealth,particularlywhenrevenueraisingforhealthisindependentfromgeneralgovernmentrevenuecollection.

Efficiencyofraisinggeneralgovernmentrevenuesisbeyondthehealthsector.Inefficiencyincollectingchargesleviedbyministriesofhealthorhealthinsurancepremiums–poormanagement,poorinformationsystems,lackofmotivationofstafftocollectrevenues,inabilitytoenforcepaymentofcontributions,inabilitytoidentifytheindigentwhodonotpay,corruption.

Feeandpremiumsystemsenforceableatlowcost,improvedskills,managementandinformationsystemsfortrackingpaymentsandserviceuseparticularlyinnationalhealthinsurancesystems;organizational/staffincentivestocollectfees/premiums;user-friendlywaysforpeopletopaycontributions;methodsofidentifyingtheindigent;corruptioncontrol.

9. Fragmentationinthesystem:inpooling,butinthebroaderhealthsystemaswell-e.g.procurement,supplychains,laboratories,servicedelivery.

Donorpractices(developingsystemsfor:channellingandtrackingfunds;procurementanddistribution;employment;servicedelivery;monitoringandevaluation)outsidegovernmentstructures;powerstructuresintheministryofhealth;responsibilitiesinafederalsystem(e.g.centralgovernmentresponsibleforhospitals,lowerlevelgovernmentforotherservices);pressurefromthealreadyinsuredtomaintaintheirbenefitswhenhealthinsurancefortheinformalsectorisdeveloped.

Organizationalorvirtualintegrationasappropriate–e.g.standardizedinformation,budgetingandaccountingsystems,planning,M&Eacrossfragmentedunits.Riskadjustmentacrosspools.

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10. Administrativeinefficiency:higherthannecessarycostsfortheservicesoffered,includinginhealthinsuranceagencies.

inflexiblestaffcontracts;lackofincentivesforefficiency;inadequatetrainingandknowledgeofmanagersandstaff;highstaffturnover.

contractsystems;incentivesforefficiency;improvedknowledgeandcapacitiesofstaff;policiesandincentivestoretainstaffwherehighstaffturnover

MostoftheoptionsconsideredinTable3involvemakingchangestoexistingstrategiesthat

eitherobtainmorefortheexistingresourcesorensurethesameoutcomesforfewerresources.TheyrepresentmovementtowardsthefrontieridentifiedinFigure1.Thereareothertypesofinterventionsthathavethepotentialtoshiftthefrontierbyexpandingthetechnicaloptionsforimprovinghealthandfinancialprotection.SomeexamplesareprovidedinBox2,althoughtheremainderofthissectionfocusesontheoptionslistedinTable3.

Box2:ShiftingtheFrontier:InnovationsinHealth

Alongsideeffortstodeliverhealthservices,productdevelopersandpractitionersareadvancinginnovationstoensurethatpeopleinlow-resourcesettingshaveaccesstonewapproachesforlife-savinginterventionsthatvastlyexpandcurrentoptions.Manyoftheseinnovativetechnologies,systems,andservicesseektoprovideaffordablesolutionsspecificallydesignedtoaddresstheneedsofvulnerablepopulationsaroundtheworld.Onenecessityfortheprovisionofqualityhealthcareisdatamanagement.Digitalhealthinformationsystemsbreakdownbarriersthatpreventtechnologiesandsystemsfromscaling,andenablesupportforplatformsthatcanbereused,adapted,andbuiltupon.Forexample,anationalelectronicimmunizationregistrybeingdevelopedinTanzaniaandZambiabytheBetterImmunizationDataInitiativeautomaticallysendsimmunizationinformationtohealthcareworkersinadvanceofvaccinationdayswithinformationregardingthenumberofchildrendueforvaccines,whichimmunizationstheyneed,andthevolumeofvaccinestockorsuppliestheclinicshouldhaveonhand.Thissystemminimizesmissedvaccines.Vaccinesareamongthemostpowerfullifesavingtoolsforchildrenunderfive.Withaccessibilitytobetterdata,healthworkersareequippedtomakebetterdecisionsaboutvaccinedeliveryandachievehigherimmunizationcoveragerates.Similarly,redesigningbiomedicaltechnologiesforuseinlow-resourcesettingswillacceleratelivessavedandaverthealthcarecosts.Forexample,oneinnovationunderdevelopmentisbetterrespiratoryratemonitorsandportablepulseoximeterstoimprovetimelydetectionandtreatmentofpneumoniaamongchildrenunderfive.Difficultiesindiagnosingpneumoniaamongyoungchildreninlow-resourcesettingsoftenleadtounnecessarytreatmentdelaysandincreasedriskofdeath.Innovationsindiagnostictechnologiescanhaveasignificantimpactwhenbettermonitoringleadstoexpandedcoverage.ArecentstudyconductedbyPATH,Harnessingthepowerofinnovationtosavemothersandchildren,modelledtheimpactofinnovativepneumonia-detectiontechnologieswhicharemorereliableandeasiertousethanexistingtools,estimatingthatjustoveronemillionlivescouldbesaved(PATH2016).18

18PATH.IC2030:Harnessingthepowerofinnovationtosavemothersandchildren.2016.http://www.path.org/publications/detail.php?i=2647;ModellingwasappliedtowardincreasedinterventioncoveragewithinthecontextofUSAID'sActingontheCallmodel.

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Innovativeapproachesareevenmoreimportantwherenotoolcurrentlyexiststoexpandcoverageforexistingproducts.ExtendingcoveragefortheHepatitisBvaccinewouldsaveupto6millionlives,forthehaemophilusinfluenzatypebvaccinewouldsaveupto1.7millionlives,forthepneumococcusvaccinewouldsaveupto1.8millionlives,fortherotavirusvaccinewouldsave900,000lives,andforthehumanpapillomavirusvaccinewouldsave500,000livesoverthenext10years(WHO2013).19Additionalbenefitsarelongerandmoreproductivelives,higherearnings,andavertedhealthcarecosts,withapotentialofupto$44returnacrossthelifespanofanimmunizedchildforevery$1invested(Ozawaetal.2016).20PrioritizinginnovationwithinaUHCframeworkwillenablecountriestotakeadvantageofarichsetofemergingtoolsthatcanenabledramaticchange,includingreducedmortalityandmorbidity,inclusiveandsustainablegrowththroughcosteffectiveness,andimpressivegainsinhealthoutcomes(LancetCommissiononInvestinginHealth2013).21Rapidadoptionandscaleofhealthinnovationsiscriticaltofosterthesegains,asisafocusedstrategyandfurtherpoliticalcommitment(Atun2012).22Throughinnovation,UHCcanbedeliveredwiththegreatesthealthvalueformoney,providingpeopletheopportunitytoleadhealthier,moreproductivelives.Source:PATH

AnimportantobservationfromTable3isthatonlyaminorityofthesolutionsaretotallywithintheremitofhealthfinancingwithitsfunctionsofrevenuegeneration,poolingandpurchasing/provision.BecausethisForumisspecificallyonhealthfinancing,webeginwithwaysthatthehealthfinancingfunctioncancontributetoimprovingefficiency.Itisnotintendedtodescribeallthedetailsofhowtoimplementthevarioushealthfinancingstrategiesrelatedtoefficiency,buttooutlinethebroadareaswherethereisagreementthatthesolutionswork.Oncecountrieschoosethetypeofstrategytheyareinterestedinimplementing,technicalworkwouldthenneedtobeundertakentodesignthespecificdetails,buildingonaverylargeliterature.

Afterthehealthfinancingoptions,thepaperconsidersbrieflysomeoftheadditionalstrategies,onthegroundsthatifacountryisseriousaboutreducinginefficienciesitwillneedtouseamixofmeasuresthatinclude,butarenotexclusivetohealthfinancing.

Onepartoftheefficiencyofrevenuegenerationisthecostofenforcementandadministration,togovernment,householdsandfirms,sometimescalledadministrativeefficiency.Asecondpartistheyieldgeneratedfromatax,orproductionefficiency.Thethirdpartisthecostsoftheeconomyofchangesinbehaviourandeconomicoutputresultingfromaparticulartax–forexample,peopleworkinglessbecauseofhighmarginaltaxratesontheirincome,typicallycalleddeadweightlosses(e.g.Okafor2012;Thompson,BeattyandThompson2012;Scott2014).Financedepartments,sometimesworkingwithexternalagenciesliketheIMF,theWorldBankandRegionalDevelopmentBanks,constantlyseektoreducethecostsofenforcementandadministrationandincreaseyields.Generalizationsarethatcorruptionincreasesadministrativecosts,andincomebased19WorldHealthOrganization.GlobalVaccineActionPlan.SecretariatAnnualReport.Geneva,2013.20Ozawa,S.etal.ReturnOnInvestmentFromChildhoodImmunizationInLow-AndMiddle-IncomeCountries,2011–20.HealthAffairs.2016,35:2199-207.21LancetCommissiononInvestinginHealth.Globalhealth2035:aworldconvergingwithinageneration.Lancet.2013;382:1898–1955.22RAtun.Healthsystems,systemsthinkingandinnovation.HealthPolicyandPlanning.2012;27(suppl4):iv4-iv8.

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taxesaredifficulttocollectwhenthereisalargeinformalsector(e.g.Imam&Jacobs2014).Indirecttaxesyieldmorethanincometaxesonindividualsinthesesettings.Thresholdsatlevelsthatexcludesmallenterprisesavoidhighcostsofenforcementrelativetoyieldsandimproveequity.Varioustypesofreformscanincreaseyieldoradministrativeefficiencyincluding,forexample,theestablishmentofsemi-autonomousrevenuecollectionagenciesatnationaland/orsub-nationallevels(VonHaldenwang,VonSchillerandGarcia2014).

Thisisrarelysomethingthatisconsideredbythehealthsectorexceptwhenthecollectionofhealthinsurancepremiumsoruser-chargesispartofitsmandate.Drawingfromthepublicfinanceliterature,itisdifficulttousetheincometaxsystemtocollecthealthinsurancepremiumswhenthereisalargeinformalsector,soothermethodsneedtobedevised.Variousinnovationsfrombroadertaxationcouldalsobeuseful,includinglocatingagenciesthatcollectpremiumsclosertothepeoplethatwillpaythem,orlicencingfacilitiesthatarewelldistributedinthecountrytocollectthem.However,theexperienceinThailandsuggeststhattheadministrativecostsofcollectionoftheoriginal30Bahtco-paymentfromtheinformalsectorwerehighandoutweighedtheyield,somethingthatcanapplyalsotocollectionofpremiumsfromtheinformalsector(Limwattanonetal.2011).Forthisaswellasequityreasons,thereisabroadconsensusthathealthinsurancecoverageofbasicservicesshouldbefinancedfromgeneralrevenue,whilecontributionsareaconditionforeligibilitytoawidersetofhealthservices.

Thegeneralconsensusonpoolingisthatsmallpoolsareinefficientintermsofhighadministrativecosts,andtheycanresultininequitiesifonepartofthepopulationiscoveredwithmoreandbetterservicesandhighfinancialprotectionthanothers(e.g.Raoetal.2014;Mengetal.2015;Kutzin,YipandCashin2016).Itis,however,sometimesdifficulttomergeexistingpoolsforpoliticalreasons,andcountriesmovingtowardshealthinsurancefromscratcharebestadvisedtoavoidcreatingdifferentpoolscoveringdifferentpopulationgroupswithdifferentbenefits(Hanvoravongchai&Hsiao2007;Knauletal.2012).

ThequestionofhowtopurchaseinputsandservicesisimportanttomanyoftheefficiencyproblemsinTable3.Therearefourcomponents.Thefirstinvolvesachoiceoftheappropriatemixofpersonalhealthinterventionsavailableintherightplaces,themixbetweengovernance,publichealthandpersonalhealthservices,andtheappropriatemixofinter-sectoralandmulti-sectoralactionsinsupportofhealthsectorstrategies.Possiblemethodstoassesstheefficiencyofthedifferentoptions,andtheirweaknesses,werediscussedearlierbutmanycountriesareintheprocessofassessingtheappropriatemixofservicestoguaranteetoeveryoneandwheretheyshouldbeprovided.Redirectingresourcesfromunnecessaryandharmfuloverusedservicestolow-costhigh-impactservicesthatareunderusedaddressestwosourcesofinefficiencyatthesametime–over-andunder-use–andnegativelists,orlowvaluelistsofinterventionsthatshouldnotbeusedorwillnotbecoveredbypayersareoneofthepossibleoptionsofdoingthis(Elshaugetal.2017).

Reducingtheproportionofpatientswhobypasslowerlevelservicestousemorecostlyservicesatsecondaryortertiarylevelsbecauseoftheirperceivedbetterqualityisanotherpartofensuringthattheneededservicesareprovidedintherightplace.Thisrequiresnotonlyhavingsomeformofgatekeeping,butalsostrengtheningthequalityofprimarycareservices.Box3outlinessomerecentdevelopmentsonsupporttocountriesseekingtodeveloptheirprimaryhealthcare.

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Box3:SupportingPrimaryHealthCare

ThePrimaryHealthCarePerformanceInitiative(PHCPI)isaglobalpartnershiptohelpcountriesbuildhigh-performingprimaryhealthcaresystemsinlow-andmiddle-incomecountries.ThePHCPIpartners—theBill&MelindaGatesFoundation,theWorldBank,theWorldHealthOrganization,AriadneLabs,andResultsforDevelopment—worktosupportcountriestoachievethehealthSDGsthrough collecting better primary health care data, unearthing and sharing best practices, anddeployingdataandevidencetomakeimprovementsinthequality,effectivenessandefficiencyofprimarycareservices.High-performingprimaryhealthcaresystemsarecriticaltoensuringthattherightthingsaredoneintherightsettings:

× Primarycare isthefront lineofhealth–closetopeopleanddeliveringessentialhealthserviceslikevaccinations,maternalandnewborncare,andfamilyplanning;

× Good primary care helps patients manage chronic diseases, avoiding unnecessaryhospitalizationsandcareandtimeawayfromfamilyandwork;

× Primaryhealthworkersformtheearlywarningsystemfordetectingandstoppingdiseaseoutbreaksbeforetheybecomedeadlyepidemics–thisisthefirstlineofdefenseagainstepidemics;

× Whentherightthingsaredoneintherightway,primaryhealthcaresystemscancoverthelargemajorityofhealthneedsinwaysthatareresponsive,safe,ofqualityandtrustedbythepeopletheyserve.

High-performingprimaryhealthcaresystemsarealsothebackboneofefficienthealthsystems.Inbothhighandlowincomesettings, ithasbeenshownthatstrongprimaryhealthcarepreventsmanyillnessesandcatchesothersearlywitheffectivelow-costtreatment,therebykeepingpeopleoutofhospitalandreducingsubsequenttreatmentcosts(e.g.Kruketal.2010;Kringosetal.2013).Effectiveservicedeliverymeansthatpatientsreceivetherightpreventivecareortreatment,attherighttime,intherightplace,andwithrespect.DoingthisrequiresattentiontofivePHCsystemsfeatures(adaptedfromStarfield1992):

× First-contactaccess:Primaryhealthcaresystemsshouldserveastheentrypointintothehealthcaresystem,wherepeoplecanaccessaffordablecareformosthealthneeds.

× Comprehensiveness: Primary health care systems should deliver a broad spectrum ofpreventative, promotive, curative and palliative care – for example, throughmultidisciplinary teams that contain health professionals with varied, complementaryskills.

× Continuity: Primary health care systems should support long-term patient-providerrelationships–allowingproviderstocareforpatientsateverystageoflife.

× Coordination: Primary health care systems should coordinate an individual’s journeythroughcomplexhealthsystems.

× Person-centeredness:Primaryhealthcaresystemsshouldbeorientedaroundtheneedsofpeopleandcommunities.

ThePHCPIrepositoryofpromisingpracticesexplainshowleadinglowandmiddleincomecountriesputthesefivefeaturesintopracticetoimprovethequalityandefficiencyoftheirprimaryhealthcaresystems:http://phcperformanceinitiative.org/tools/promising-practices

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Thesecondcomponentinvolvesdevelopwaysofpayingforthechosenservices(Honda2014;Maedaetal.2014;Tangcharoensathienetal.2015;Xu,ChengandColón-Ramos2015;Bastanietal.2016;Kutzin,YipandCashin2016).23Providerpaymenthasbeenshowntobeapowerfultooltoinfluencethebehaviourofproviders,andinturntheprovisionofcare.Ingeneral,theevidenceshowsthatnosingleproviderpaymentmethoddeliversvalueformoneyinallsettings.Forinstance,capitationencouragesefficiencybutmayleadtounder-provisionofservicesandincreasedreferrals.Ontheotherhand,fee-for-servicecanleadtooverprovisionofservicesandcanleadtocostescalation.Therehasbeenalsobeengrowinginterestinperformance-basedfinancinginhealthinrecentyears;althoughthemorerecentevidenceonqualityofcareandefficiencyisscattered–seethenextsectionofthispaperonwhatwedonotknow.

Countriesshoulddecidewhicharethemostappropriateblendsofpaymentmethodsusewithineachcaresetting,andhowthesepaymentmethodblendsalignacrosscaresettingstoachieveitsownpolicyobjectiveswithregardstoprovisionofcare,costandquality,(Cashinetal.,2009).“Blending”differentpaymentmethodswithincaresettingsisdonetoencouragecertaindesiredoutcomesaswellastomitigatethenegativeincentivesofindividualpaymentmethods(BelliandHammer1999;DranoveandSatterthwaite2000).Forexample,inprimarycare,capitationandFFSpaymentsareoftencombined.TheFFSpaymentsareusedprimarilytoencouragetheprovisionofcertainpriorityservices(e.g.vaccinations),servicesandprocedureswhichrequirecostlysupplies(e.g.injectablemedicines),aswellasserviceswhichlieontheborderbetweenprimaryandspecialistcare(e.g.woundcare,drainageofabscesses,removalofbenignlesions)andthustendtobereferred(Robinson2001).Incombinationwithcapitationpayments,primarycareprovidersarestillencouragedtolimitthevolumeofservicesprovidedtoachievecostsavings(LangenbrunnerandWiley2002;LangenbrunnerandSomanathan,2011).Similarly,theblendsofpaymentmethodsacrosscaresettingsshouldbetakenintoaccounttoensurethatincentivesarealignedwithhealthsystemobjectives(e.g.encouragingbettermanagementofpatientsattheprimarycarelevel,reducingincentivestoincreasevolumesinoutpatientspecialistandacuteinpatientcare,increasingincentivesforcoordinationwithprimarycareafterdischarge,etc.).

Thethirdcomponentinvolvesstrengtheningcontractingandprovidermonitoringcapacitiesofthepurchaserinordertoenforcetheintendedbehaviourchangesofnewpaymentmethods(Cashinetal.,2009).Providercontractscanhelpcontributetohealthsystemobjectivesbytakingadvantageofprovisionsrangingfromethicalcodesanddatadisclosurerequirementstocostandvolumecapsandrisksharingmechanismstoreducetransactioncostsandshapeproviderbehaviors.Inaddition,purchaserscanestablishandusetransparentcriteriafromwhomtocontract,forexample,accreditationand/orminimumvolumerequirementstofosterqualityofcare.Providermonitoringenablescontinuousqualityimprovementbyhighlightingareasofcaredeliverythatneedoptimization,andbysettingcommontargetsfortheseareas.Whenemployingpaymentmethodsthatencouragecostreduction(e.g.capitation,bundledpayments,etc.),useofqualitymonitoring,inadditiontoriskadjustment,isessentialtoensurethatprovidersarenotcuttingcostsinwaysthatjeopardizepatienthealth.Providermonitoringcanincludeactivitiessuchasclinicalaudits,regularcollectionofdataonspecificqualityindicators(e.g.adherencetoclinicalguidelines,adverseevents,patientsatisfaction).Basedonthemonitoringresults,purchaserscanholdprovidersaccountableaccordinglybyrewardinghigher-levelperformersand/orsanctioninglower-levelperformers.

Finally,thefourthcomponentinvolvesempoweringpatientstoholdpurchasersandprovidersaccountablethroughformalrepresentationofconsumersinpurchasingorganizations,

23Thisissometimescalledstrategicoractivepurchasing.

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developmentofpackagesofcarewithformalcoverageguarantees,establishmentofpatient’srightslegislation,chartersorethicalcodesandthedevelopmentofaformalmechanismtoreceiveandrespondtopatientcomplaints(Busseetal.2007).

Improvedpublicfinancialmanagement(PFM)wouldcontributetoreducingmanyoftheformsofinefficiencyidentifiedinTable3.Theseincludereducingthefundsreturnedtothetreasurybecausetheyhavenotbeenusedinthefinancialyear,helpingtocontrolcorruption,fraudandothertypesofwaste,andlinkingpublicexpendituresmorecloselytoresults(Fritz,SweetandVerhoeven2014;Barroy,SparkesandDale2016;WHO2016;Cashinetal.2017).DespitetheconsiderableattentiongiventoassessingPFMsystemsoverthelastdecade,itisnotclearthatreformshavebeenuniversallysuccessful(Hepworth2015).Thiscanbelinkedtothepoliticaleconomyofreforms,somethingthatistakenupinthenextsection.

WeusemedicinestoillustratesomeoftheotherstrategiesfromTable3thatcancomplementhealthfinancingchangestoachievemorewiththeavailableresources.Manystrategieshavebeenshowntoincreaseefficiencyinavarietyofsettingsrangingfromestablishingandenforcinganessentialmedicineslistwhichusesgenericstothemaximumextent,increasingthetransparencyandinformationavailableformedicineprocurementsothatcountriespaytherightpriceandcorruptioniseliminated,developingthecapacitytomonitormedicinesafetyandqualitynotjustwhenmedicinesarelicencedorregisteredbutoncetheyenterthedistributionsystem,eliminatingincentivesforover-prescriptionsuchasseparatingprescribingfromsales,andvarioustypesofstrategiestoimproveproviderandpatientknowledgeaboutgenerics,appropriateandtimelyprescriptions,andtheimportanceofadherence(e.g.Holloway2011;Hollowayetal.2013;Atavetal.2014;Chenetal.2014;Hassalietal.2014;Hurley2014;Choudhryetal.2016).Itis,however,clearthatitissimplertoimplementthesepoliciesinthepublicthanintheprivatesectorwhereregulationssometimesdonotexistandwheretheydo,enforcementisdifficult(e.g.VanNguyenetal.2013;Sheikh&Uplekar2016).

ThereissimplytoomuchliteraturedescribingattemptstoimprovetheefficiencyintheothercomponentsofhealthsystemstoreportitallherebutarecentWHOpublicationsuggeststhat,inadditiontoconsideringhealthfinancing,itisusefultoworkthroughthehealthsystemfunctionsofgenerationofhumanandphysicalinputs,governance/stewardshipandservicedelivery(Sparkes,DuránandKutzin,J.2017).Theythensuggestlookingforinefficienciescommontoeachfunctionandinefficienciesthatpreventtheintegrationofactivitiesacrossfunctions.WeturnnowtodiscussingsomeoftheareasonwhichthereisnoconsensusandwherefurtherevidenceanddiscussionatthisForumwouldbevaluable.

2) WhatwedonotknowSomerecentdevelopmentsthatmayimproveefficiencyinhealtharestillintheirinfancy.Forexample,thequestionofwhetherelectronicmedicalrecordsimproveefficiency,andifsoinwhatcircumstances,isstillbeingexplored(e.g.Nguyen,BellucciandNguyen2014;Campanellaetal.2015).Thistypeofquestioninnotdiscussedherewherethefocusisonareasofdisagreementorwherethereissimplynotenoughinformationonlongstandingquestionstomakeinformeddecisions.

i. PayingforresultsManyexperimentshavebeenundertakenwithformsofresults-basedpaymentsthat

supplementincomesforstafforinstitutionsinreturnforasetofagreedoutputs(e.g.Rudasingwa,SoetersandBossuyt2015;Das,GopalanandChandramohan,2016;Spisaketal.2016).Similarly,

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therehavebeenrecentexperimentswithformsofvalue-basedpayment24asareplacementforfee-for-serviceintheUSwiththebroadergoalofimprovingcontinuityofcareandprovidercoordinationaswellasreducingthegrowthofcosts(e.g.Conradetal.2014;Dambergetal.2014;Carey2015;Press,RajkumarandConway2016).Analternativeiscalledpopulation-basedpayment.Bundledandpopulation-basedpaymentsarerelativelynew,butthepreliminaryresultsarepromising,althoughtheyrequiretheabilitytodesignandimplementariskadjustmentsystemandtomonitorresults.AbriefsummaryisprovidedinBox4.

Box4:NewOptionsforStrengtheningProviderPaymentMechanismsforCareIntegration

Twonewpaymentmechanismsarecurrentlybeingpiloted,mostlyinhigh-incomecountries,toimproveintegrationofcare.Theyare(i)bundledpaymentsforacuteepisodesofcareandchronicconditionsand(ii)population-basedpayments(PBPs)coveringspecificservicesfordefinedpopulationgroups.Thesepaymentmethodsspanacrosscaresettingstoincreaseincentivesforprovidercoordination.

Bundledpaymentsforacuteepisodesandchronicconditions.Bundledpaymentsinvolveasingle,fixedratepaidtotwoormoreproviderstocoverallservicesdeliveredfor:(i)treatmentofanacuteepisodeofcare,or(ii)managementofthecareforpatientswithaspecificchronicconditionordisease(AmericanMedicalAssociation,2016).BundledpaymentsforacuteepisodesofcarehavebeenpilotedintheUSandEuropesincethemid-2000s.ExamplesincludeBestPracticeTariffs(BPTs)intheUK,coveringadmissionsforhipfracture,stroke,cholecystectomyandcataractsurgery,andOrthoChoicebundledpaymentsinSweden,coveringorthopedicproceduresincludinghip,kneeandspinesurgery(Srivastaetal.2016).Thesepaymentstypicallycoverthecostsofallinpatientandoutpatientservicesfromtheinitialvisitthroughtreatment,recoveryandrehabilitation,includingpost-dischargecareandanycomplicationsthatmayresultwithinacertaintimeperiodafterdischarge(PorterandKaplan2015).Bundledpaymentsforchronicconditionshavebeenimplementedtohelpimprovecoordinationofcareforthesepatientsandaimtoencourageaholistic,long-termperspectiveratherthanone-offencountersorinterventions(Srivastaetal.2016).PilotsofthesebundledpaymentsinEuropeancountrieshavefocusedonbothrare,yethigh-costdiseases,andonmorecommonchronicconditions.Thebundlestypicallycoverallservicesrelatedtothemanagementofthediseaseorcondition,inlinewithclinicalguidelinesandpathways,andcanspanmorethanonecaresetting.Forexample,undertheDutchbundledpaymentscheme,servicesincludedregularprimarycarecheck-ups,additionalconsultations,imaging,labtests,examinations(e.g.footexaminations),counselling,medications,psychosocialcare,andcoordinationofspecialistservices.Thecostsofcomplicationsfromthesediseasesaretypicallycoveredoutsideofthebundle(PorterandKaplan2015).Thepaymentistypicallytime-based(permonthoryear)since,unlikeacutecareepisodes,thecycleofcareforachronicconditioncoveredbyabundledpaymentmaycontinueindefinitely.Bundledpaymentsforacutecareepisodeshavebeenshowntoachievesignificantcostssavings,withnoorlittledeteriorationofquality.Theimpactsofbundledpaymentsonchronicconditionsarelessclear.InPortugalcostsfortreatingHIV/AIDSdecreasedwhilequalityofcarewasmaintained(e.g.,patientadherencetomedication,controlledinfectionlevels,complianceofproviderswithtreatmentguidelines,etc.).However,whilequalityimprovementswereobserved

24Value-basedpurchasing“referstoabroadsetofperformance-basedpaymentstrategiesthatlinkfinancialincentivestohealthcareproviders'performanceonasetofdefinedmeasuresinanefforttoachievebettervalue”(Dambergetal.2014).

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forbothdiabetescareprocessandpatientoutcomeindicatorsintheNetherlands,costsincreased.Reasonsforthisincreaseareunclear,butmaybeduetodelayingtheuseofspecialistcare,whichcouldhaveresultedinmorecostlycare.

Population-based-payments.Population-basedpayment(PBP)modelsinvolvesettingaprospectivebenchmarkbudget,whichformsthebasisforpaymentstogroupsornetworksofprovidersfortheprovisionofallorthevastmajorityofservicesforadefinedpopulation.ThesemodelshavebeencloselyrelatedtotheemergenceofAccountableCareOrganizations(ACO)-networksofhealthcareprovidersthatarecollectivelyaccountablefortheorganization,costsandqualityofhealthcarefortheirmembers–intheUnitedStatesandelsewhere.Similartobundledpayments,providersarepermittedtokeepatleastportionofthesavingsgeneratedbelowthebenchmarkbudget(contingentonachievingspecifiedqualitytargets)andmayberesponsibleforanycostsexceedingthetotalPBPamount.BecausePBPscoverarangeofservicesacrossprovidersandarenotlinkedtospecificcareepisodesorconditions,theyarethoughttopromotegreaterintegrationofcare,amoreholisticviewofpopulationwell-beingaswellasincentivesforinnovationstokeepcostsdown(e.g.,riskstratifiedcasemanagement,dischargeplanning,preventiveactivities,etc.).

ThelargestACOpilotsareintheUS,partofbroaderreformsmandatedbytheAffordableCareActof2010.Forexample,Medicarehascontractswithover400ACOs.ProvidersformingtheACOtypicallyincludeprimarycareprovidersandhospitals,butcanalsoincludespecialists,long-termcarefacilitiesandhomecare(Srivastaetal.2016).InEurope,examplesofPBPmodelsforACOshavebeenimplementedinGermanyandSpain.Therangeofhealthservicesprovidersarefinanciallyresponsibleforvariesacrosstheavailablemodels.IntheMedicaremodel,ACOsarefinanciallyresponsiblecostswhichincludeinpatienthospitalcare,skillednursingcare,hospiceandhomehealthservicesaswellashospitaloutpatientcareanddoctors`services.InGermany,providersareresponsibleforallheathcarecostsfortheinsuredpopulationwiththeexceptionoflong-termcare(Srivastaetal.2016).ThesizeofthepopulationthatisassignedtoanACOalsovarieswidely,rangingfrom5000to245,000patients.PBPimplementationisrelativelyrecentandanyimpactsobservedonqualityandcostshouldbeconsideredpreliminary.AsubsetoftheMedicareACOs,knownasPioneerACOs,wereabletoachieveimprovementsin28ofthe33requiredqualityindicatorsincludingcontrollinghighbloodpressure,screeningforfuturefallriskandscreeningfortobaccouseandcessation,forexample.Onanaggregatelevel,MedicareACOscontributedtoslowingthegrowthinhealthspending,thoughnotallwereabletoachievecostsavings.In2012,totalnetsavingsforMedicareinamountedto$383millionwhiletheGKmodelachievedsavingsofEUR4.6million(Srivastaetal.2016).Source:WorldBank,Forthcoming

Intermsoftheexperiencewithresultsbasedpaymentsorpaymentforperformanceinlower-incomecountries,therehavebeenmixedresults.Sometimestheyhavethedesiredimpactandsometimestheydonot.Theycanworkforsomeofthedesiredoutcomesbutnotforothers(e.g.Foxetal.2013;Mills2014;Binyarukaetal.2015;Das,GopalanandChandramohan2016).Thereisundoubtedevidencethattheyhavestimulatedstaffmotivation,qualityandefficiencyattimes,andthemoreintensiveinformationsystemstheyrequirehavealsobenefitedthewiderhealthsystem

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(Cashinetal.,2014).However,systematicquantitativeassessmentormeta-analysisacrosstheexperimentsiscomplicatedbythefactthateachexperimenthasbeendifferentinthetypeofhealthworkerstheytarget,intheoutputsforwhichpaymentistriggered,orinthewaypeoplearepaid,sodatastrictlyshouldnotbepooledwithoutsomewayofcontrollingforthisheterogeneity(MarkovitzandRyan2017).Itisalsonotcleartheextenttowhichtheseexperimentsaresustainable,asmanyofthemhavebeenfundedbydevelopmentpartners,attimesindependentofacountry’sfinancingsystemandonlywithemergingevidenceoftheprogramcosts(DeBruinetal.,2011;Eijkenaar,2013;Cashinetal.,2014).

Furtherworkisneededtobeforeitispossibletobesurewhatpaymentmechanism,ormixofpaymentmechanisms,bestencourageshighstaffmotivation,quality,andefficiency.Tocontributetothis,theWorldBankGroupiscurrentlyintheprocessofsummarizingtheirexperienceswithformsofresults-basedfinancing.

ii. TheprivatesectorandefficiencyTherehasbeenconsiderablerecentinterestintheappropriateroleoftheprivatesectorin

healthandmanyorganizationshavedevelopedstrategiesforengagingwiththeprivatesector(IFC2011;USAID2009;WorldBank2013).Systematicreviewsoftheextensiveliteraturesuggest,however,thatthereisnoevidencethateitherpublicorprivatehealthservicesareinherentlymoreefficientorofhigherqualitythantheother(Coarasaetal.forthcoming;Berendesetal.2011;Basuetal.2012).Thekeyissuesandchallengesinservicedelivery,suchassubstandardpatientsafetyandqualityofcare,excessiverelianceonhospitalsandinadequateinfrastructure,arecommonacrossthepublicandprivatesectors.Moreover,deficientsafetyandqualityhaslesstodowiththeownershipoftheproviderthanwiththeincentivesfacedbytheprovider.Thismeansthatinseekingtoexpandservicecoverage,thereisnoreasontoarguethatmorepublic,ormoreprivate,isthepreferredoption.

Opportunitiesdoexisttoengagethepublicsectoratbothhospitalandprimarycarelevelsandexamplescanbefoundofpublic-privatepartnershipsimprovingcoverageandqualitywithhospitals.Attheprimarycarelevel,engagementwiththeprivatesectorhasincludedcontracting,providernetworking,implementationofvoucherschemes,andinclusionofinformalprovidersintheformaldeliverysystem(includingprogrammesaimingatretrainingandformalizingtheirstatus)(Montagu&Goodman2016).However,whilethereseemstobeawideconsensusthatmoreeffortsshouldbeundertakentoestablishadialogueandrelationshipbetweengovernmentandprivateproviders,theredoesnotyetseemtobeagreementonhowbesttodoit.

Thereismoreagreementthatsomeinnovationsintheprivatesectorhavebenefitedthepublicsector.Theseincludeinnovationsin:businessprocessfunctionssuchasmarketing,financing,andoperating;promotionofhealthservicestothepoorthroughsocialmarketingandservicedesign;redesigningcoststructuresthatallowproductsandservicestobemoreaffordableforthepoor,byloweringoperatingcoststhroughsimplifyingmedicalservices,loweringunitcoststhroughhighervolumesandcross-subsidization;andnewoperatingstrategiesthatincreasetheavailabilityofservicesinremoteareas,mainlyachievedthroughoptimizinghumanresources,processandproductreengineering,andincreasingoutreachactivities(Bhattacharyya,etal.,2010).

iii. HumanresourcestrategiesforefficiencyConsiderableworkhasbeendoneonhumanresourcestrategiesinadditiontohowtopay

providers.Thisincludesdevelopingstrategiesandincentivesfor:continuoustrainingorretainingwherenecessary;retainingstaff;ensuringtherearesufficientstaffwiththerightskillsinisolatedanddisadvantagedareas;andtryingtocontrolharmfuleffectsofdualpractice(e.g.Asanteetal.

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2014;Rawaletal.2015;Araujo,EvansandMaeda2016;GwynneandLincoln2016;Yazbeck,RabieandPande2017).Thesestrategiesareoftenbasedonresearchonthefactorsthatmotivateordemotivatehealthworkersindifferentpartsoftheworld(e.g.Bonenbergeretal.2014;Hotchkiss,BanteyergaandTharaney2015;VanYperen,WörtlerandDeJonge2016;Wurie,SamaiandWitter,2016).

Salariesandfinancialincentivesarenottheonlyissue,buttheyareimportantinmostsettings.Inlowincomecountries,thekeyissueishowtoaddressthewiderangeofissuesthatwouldreducethehealthworkershortage,improveskillmixesandensuremotivatedworkersareatworkandlocatedwheretheyareneededfortheavailableresources.WhereMinistriesofHealth(andEducation)arehavelimitedresources,whereshouldtheystart?Thisrequiresanassessmentofwherethebiggestimpactwouldbeobtainedforgivenlevelsofexpenditure,butthisinformationisnoteasilyavailable–usingdualpracticeasanexample,therehavebeenmanyattemptstocontroltheproblemsassociatedwithpublicsectorhealthprovidersworkingalsointheprivatesector,buttherearefewgeneralizablelessonsofwhatstrategieshavehadsustainablesuccess(e.g.SandierandPolton2004).

iv. CostsofimprovingefficiencyManystudieshaveevaluatedtheimpactofattemptstoimproveefficiencyinthehealth

system,somereportedhereandsomeintheAnnextothisdocument.Rarelyarethecostsreported.Wheretheyare,informationisrelativelysparse–forexample,Conradetal.(2014)reportedthattherearesubstantialtransactioncostsinvolvedinintroducingvalue-basedpaymentsintheUSAincludingthoselinkedtochangesinthecomputerpaymentsystems(Conradetal.2014).Thereisscatteredinformationthattransactioncostsmightbehighforresults-basedfinancinginlowerincomecountries,totheextentthatBorgietal.(2015)questionediftheeffectsjustifythecosts.Allstrategiestoimproveefficiencyinvolvetransactioncosts,andthisinformationiskeyfordecisionmakersseekingtoallocatescarceresourcestointer-sectoralactions,improvethequalityandrangeofservicesavailableandincreasefinancialprotection–andimproveefficiencyatthesametime.

v. PoliticaleconomyissuesThehealthsectoriscomplex,shapedbypowerfulinterestgroupsandmanyinterestsinboth

the public and private sectors interact and collide on a daily basis (Daemmrich 2013). Efficiencyreformschallenge the statusquo in theprovisionofhealth services, and in their financingand/ororganisation,sotheynaturallytriggerbroaderpolitical,economicandethicalconcerns(Robertsetal.2004).Efficiency reformscannot, therefore,beviewedonly froma technical sideand thepoliticaleconomyaroundtheirpossiblesuccessorfailurealsoneedstobeunderstood.PerhapsthisiswhyFoxandReich(2015)arguethatsuccessfulreformsaretheexceptionratherthantheruleinhealth.

Formalmodelsofpoliticaleconomyarenowbeingappliedtohealthreformsmorefrequentlytoshedlightontheseprocesses:forexample,modelsofcompetinginterestgroupsandvotermodels(seeHauck&Smith,2015);politicalsettlementanalysis(Kelsall,Hart&Laws,2016);andstakeholderanalysis(Bumpetal.2014).Reichetal.(2016)arguethatmappingoutthevetopointsandvetoplayersiskeytoanyreforms–vetopointsare‘juncturesinthelegislativeandpolicydesignwherereformscanbeblocked’,whereasvetoplayersare the ‘individualsorcollectiveactorswhoseagreement isrequiredtomakepolicydecisions’.

Severalstudieshaveshowntheimportanceof‘events’(e.g.politicaloreconomiccrises,wars,ornaturaldisasters)intriggeringareformprocess.Thoseeventsarecrucialastheytendtochallengethepowerofinterestgroupsandcollectiveactorswithinthehealthsystemandinsomecases,theyleadtoabreakingpointwherethesystemisnolongerdeemedappropriate.Forinstance,Reichetal.

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(2016)findthatthecollapseofcommunismledtoapoliticaldiscussiononsocialprotectionsystemsand design of major health reforms promoting the development of primary health care and theimplementation of essential benefit packages. In France, the United Kingdom and Japan, thedevelopment of universal coverage financing system was integrated as part of the post-warreconstructionprocess(Stuckleretal.,2010;Reichetal.,2016).InThailand,the1977AsianfinancialcrisiswasthestimulustodeveloptheUHCSchemethatextendedcoveragewithhealthservicesandfinancialprotectiontotheentirepopulation(Patcharanarumoletal.2011),whilethe2008financialcrisiswasthestimulusforaseriesofreformsincludingthosethatincreasedefficiencyinthehealthsystem(Houetal.2013).

StudiesfromKyrgystanandMexicoshowhowhealthreformbecameapoliticalagendathatobtained the support of the population, enabling health financing changes to be pursued despiteopposition from some interest groups (Kelsall, Hart & Laws 2016; Frenk et al. 2006; Parry andHumphreys2009).Bumpetal.(2014)traceouttheopponentsandthesupportersofrecenthealthfinancingreformsinTurkeyandactivestepsweretakentobuildsupportandreducetheopponents’supportbasewhileHarris(2015)pointstotheimportanceofagroupofcivilservantsinThailandwhobuiltsupportandcombattedoppositiontotheintroductionoftheiruniversalcoveragescheme.

Beyondthis,thereislittleknowledgeofwhatfactorsallowefficiencyreformstosucceedandfail,andhowgovernmentsstrengthenedsupportandovercameopposition.Itisnotyetclearifthereare generalized lessons from experience that would help countries learn from the experience ofothers.

That being said, it is clear that there can be political obstacles to implementing even thereformsthattechnicallyseemthesimplest.Differenttypesofhospitalreformstoimproveefficiencycan be opposed by managers, clinical staff, non-clinical staff, or the community (e.g. Galetto,MarginsonandSpieser2014).Closinghospitalsorreducinghospitalsbedsinthefaceofover-capacityis likelytobeopposedbypoliticians inwhoseelectoratethehospitalsare located,bytheaffectedcommunity,andbyemployees(e.g.Bloometal.2015).Animportantrequirementforthesuccessfulimplementationofefficiencyreformsistoundertakeaformofpoliticalmappinginthedesignphase,tounderstandwhoislikelytosupportoropposethereform.Strategiesfordealingwithopposition,includingengagementwithkeystakeholders,thenneedtobedevelopedandimplementedbefore,oratthesametime,asthereformsthemselves.

VIII. EfficiencyandequityReducing inefficiency is a means of moving more rapidly towards UHC for the available

resources,therebyimprovingpopulationhealthandfinancialwellbeing.Efficiencyanalysisdoesnottypically account for the distribution of coverage and outcomes across population groups butconsiders aggregate outcomes at the population level. Improving population health and financialprotectionareanimportantgoalsofhealthsystemdevelopment,butreducinginequityisalsocriticalandthereisalargeliteratureonthenatureofinequalitiesandinequitiesinhealthandhowtoimprovethem(e.g.WHO2000;deAndradeetal.2015;Mackenbachetal.2015;Marmot2015).

Thequestionofwhetherthereisanefficiency-equitytrade-offinhealthpolicyhasalsobeenwidelydiscussedinthelasttwodecades:drawingonthisliteraturetheWorldHealthReportof2000stated that ‘equity and efficiency can be easily in conflict’ (WHO, 2000). For instance, someinterventionsdirectedspecificallytovulnerablegroupsmightbemorecostlytoimplementifthosegroups are located in a remote location or present demographic, cultural or socio-economicconstraints.Ebong&Levy(2011)comparedtheefficiencyoffacility-basedandoutreachprogramsinauniversalimmunisationcampaigninCameroon.Theformerwasmorecost-effectivethanthelatter.

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However,althoughtheoutreachprogramto increasepopulationcoveragewasmorecostly, itwasmoreeffectiveatreachingvulnerablegroups.Inthesamevein,twostudiessuggestshowedthatthemostefficientprogramsforHIV/AIDSinSouthAfricawerenotthemostequitable(Cleary,Mooney&McIntyre2010;Verguet2013).Targetingthepoorandthevulnerablecameatacostintermsoftheoverallpopulationimpact.

On the other hand, some strategies that improve efficiency can also have positivedistributionalimpacts.Strengtheninginvestmentinprimarycareisthemostobviousexample.Primarycareinterventionsareoftenthemostcost-effectivewayofreducingtheburdenofdiseaseinlow-andmiddle- income countries compared to other levels of care, and primary care tends todisproportionallybenefit thepoor (Jamisonetal.,2006;Asanteetal.,2016).ThisdoesnotalwaysmeanthattherichdonotbenefitmorethanthepoorfromPHC,butthattheypoorbenefitrelativelymorefromPHCthanfromhigher-levelservices.

Someevaluationsof trainingcommunityhealthworkersandvarious formsof task shiftinghavealsobeensuggestedtoreducedeliverycosts,increasecoveragelevelsandbenefitthepoorandpeoplelivinginremoteareas.Zachariahetal.(2009),forexample,assessedthreeprogramsoftask-shiftingtoprovideARTandtreatmentmonitoring(inLesotho,SouthAfricaandMalawi),showingareductionofcosts,increasedaccessandimprovementsingeographicandsocio-economicequity.

Benefit-incidenceandfinancial-incidenceanalysishaveincreasinglybeenusedtoassesswhichgroupsbenefitthemostfromaparticularpolicyorfinancingflow–e.g.asubsidyorvoucherschemeoraparticularlevelofcare(e.g.Asanteetal.2014;Chenetal.2015;Asanteetal.2016).Whilethisinformationisinteresting,itisnotparticularlyinformativeaboutidentifyingthemostefficientwaysofreducinginequity.

Anillustrationistherelativelylargeliteratureontargetingparticularvulnerablegroupsversusamoreuniversalapproach.Mostofthestudiesoftargetinghavefocusedontheimpact,andwhetherthepoorbenefitasintended.Sometimesthepoordonotbenefitinwhichcasethereisnoneedoffurther analysis (e.g. Coady, Grosh & Hoddinott, 2004). But where the targeted group benefits,questionsofcostsandefficiencybecomeparamount.

Therearemanycostsinvolvedintargeting-administrationoftargetingschemes,continuousupdatingoftoolsfortheidentificationofthepoor,fraudcontrolandresourcetransfercosts(Coady,Grosh&Hoddinott 2004;Dutrey 2007). These are very rarely reported even in studies that showimpact.Theevidenceonthemeritsofalternativewaystoreduceinequalitiesisanimportantmissingingredienttoevidence-basedpolicydevelopmentinthisarea.

Finally,equityconsiderationshaveinfluencedthedesignofhealthfinancingstrategiesoverthelastdecades.Receivedwisdominhealthinsurancehasbeenthatitworksmostefficientlywheninsuranceisofferedforlowfrequency,highcostoccurrences.Peoplewithchronicillnessandpeoplelivingclosetothepovertylinecansufferfinancialcatastropheorbepushedintopovertyfromhighfrequency,lowcostevents.ProtectingthesepeoplefromseverefinancialhardshiplinkedtopayingoutofpocketforhealthservicesisanequityissueatthefoundationoftheconceptofUHC.

IX. ConclusionsInefficiencycanbe found in thehealthsystemsofall countries. In lowandmiddle income

countries,itimposessubstantialcostsintermsofslowingtherateatwhichtheycanmovetowardsUHCandimprovethehealthoftheirpopulations.Inhigh-incomesettingsitcanmeanthatservicesare cut or out-of-pocket payments are increased unnecessarily at a time of financial constraint.Achievingmorehealthandfinancialprotectionwiththeavailableresourcesis,therefore,animportant

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complement to efforts to raise thenecessary resources for health. Proof that thehealth sector isgettingmoreefficientmayalsopersuadetheMinistryofFinancetoallocatemorefundstohealth.

Somecountryhealthsystemsaremoreefficientthanothers,butnotallsufferfromthesametypesof inefficiency. It isalsopossible tobe relativelyefficient in someareasand lessefficient inothersbuteverycountrycoulddosomethingtoensuretheyachievemorewiththeavailablehealthresources.Afirststepistoidentifythemainsourcesofinefficiency,thereasonswhytheypersist,andwhichonesareamenable to technical solutions thatarepolitically feasible to implement.Politicalanalysis to understand the likely opponents and supporters of any particular reform, and tosubsequently build support and counteract opposition, is a critical step towards maximizing theprobabilityofsuccesswithanyreformsthatareadeveloped.

Someof thetechnicalsolutionsthatcanreduce inefficiencyarewellknownandaccepted.Within the health financing system, for example, the need to reduce fragmentation in pooling bymergingpoolsorbystartingwithasinglelargepoolisone.Soaretheideasofchoosingthemixofhealth services that is the most efficient, delivered in the right places; introducing paymentmechanismsandsystemsthatencouragequality,efficiencyandresultsbasedonreliableuptodateinformation;andoptimizingpublicfinancialmanagementpractices.

Outsidethefinancingsystem,someof thepossiblesolutionsrelatedtomedicinesarewelldocumentedalthoughtherearealsoimportantstepsthathavebeenshowntobeeffectivewithhealthworkersandinfrastructure.Theseincludeshiftingtasksfromdoctorswheretheyareinshortsupplytoothertypesofhealthworkerssoastoincreasecoveragewithoutadditionalcost.

ThesolutionsofTable3wereorganizedaccordingtothreemainpolicyquestionstheyseektoaddress:doingtherightthings;doingthemintherightplaces;anddoingthemright.Governmentswillwanttoknowwhichsolutionsofferthegreatestchancesofanimmediatebenefitandwhichoneswillreaplonger-termbenefits.Table4summarizesthosethatarethemostlikelytodelivershort-termefficiencyreturns.

Table4:PossibleQuickWins

§ Organizationandmanagementofcare- Establishmanagementnetworksfor(primary)careproviders;- EstablishandenforcegatekeepingatPHC-level;- Improveservicedeliverycapacity/qualityatlowerlevelsofcare(e.g.,PHC),including

telemedicine.§ Taxpolicies:- Implementhealthtaxesandfinancialincentivesforpersonalactiononprevention;- Removetaxesonessentialmedicines.

§ PublicFinancialManagement- Modifybudgetpracticesasnecessary–e.g.movefromlineitembudgetstomoreflexible

budgeting;timelyreleaseoffunds;- Improvecontrolstopreventcorruption;- Improveregulationandgovernancewithsanctionsforcorruptionandfraud;- Promotecodesofconduct.

§ Paymentsystems- Developmoreuser-friendlywaysforpeopletopaycontributions.

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§ HumanResourcesforHealth- Improvehealthworkforceplanningwithlinksittotrainingintakes;- Improvemanagement,supervisionandworkingconditions;- Allowhealthworkersatlowerlevelstotakeonmoreresponsibilityasappropriate(task

shifting).

§ Medicines- Developandenforcegenericspolicyandessentialmedicineslistforhealthfacilitieswith

qualitycontrolwhichmightinclude:- Limitingfinancialincentivesforprescribingbrandedmedicines- Informationongenericstoproviders/populationwithqualitycontrolsystems;- Removeinappropriatefinancialincentives–e.g.separateprescribingfromsales;- Increaseinformationtoprovidersandpatients;regulateandenforcestandardsfor

industrypromotion.- Activepurchasingofmedicineswithappropriatecompetitivebidding;- Increasetransparencyinpurchasesandtenders;- Monitorandpublishmedicineprices.

§ Informationsystems- Increasecountrycapacitytogenerateandusenecessaryinformation;- Improvemanagementandavailabilityanduseofdata.

§ Infrastructure- Improveprocurementprocessesforinfrastructure;- Refusedonationswherelocalservicecannotbeassuredorwherebudgetswillnotbeable

topayforspareparts;- Ensureappropriatemaintenanceandcleanliness.

§ Politicaleconomy- Informationsharingwithkeystakeholdersonreasonsforefficiencyactions.

Thepoliticsofefficiencyimprovementsmightmeanthatsomeofthesestrategiescouldtakeconsiderablylongerthanexpectedinsomecountries,whileothersidentifiedinTable3mightbefeasibletoimplementmorequickly.Focusingonquickwinsshouldnot,ofcourse,divertattentionfromsomeofthekeylonger-termoptionssuchaschangingproviderpaymentmechanismsandintroducingmorecomprehensiveformsofstrategicpurchasing.Thelonger-termoptionsalsosometimeswillrequireimmediateinvestmentstoensurethattheycanhaveanimpact.Forexample,strategicpurchasinggenerallyrequiresstrengtheningcapacitiesintermsofpersonalskillsandcomputerizedinformationsystems.Changingproviderpaymentmechanismswillfrequentlyrequirenewormodifiedlegislationandaperiodofconsultationwithbothpatientsandproviders.

Despitetheknowledgeabouttechnicalsolutionsinsomekeyareas,someimportantgapsinknowledgeandanumberofcontroversiesremain:

A. MixofservicesThereisaconsiderablebodyofknowledgeaboutthecostsandeffectsofdifferentsortsof

healthservicesthatcanbeusefulforcountriesseekingtochoosethebestmix.Despitethis,thechoice

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ofabenefitspackagestillreliesasmuchonanassessmentofwhatisfeasiblegiventheneedsofthepopulationasonevidenceoftheefficiencyofdifferentinterventionmixes.Theareaswhereadditionalinformationiscriticalinclude:

a) Economiesofscaleandscope:Whichinterventionsshouldbedeliveredinthesamesettingwith

thesamestaff(scope)andwhatisthemostefficientlevelofcoveragefortheavailableresources(scale)?

b) The right services in the right place: What is the efficiency of different services delivered indifferentplacesandhowtodecidewhatistheappropriatemixatcommunity,primary,secondaryandtertiarylevels?Howtoensurecontinuityofcareacrossthedifferentlevelsandacrossthelife-cycle, including the balance between prevention, promotion, treatment, rehabilitation andpalliation?

c) Governance,publichealthfunctionsandpersonalservices.Whatistheefficientbalancebetweentheseactivitiesandhowmuchshouldbespentonthem?

d) Expandingcoveragewithhealthservices,improvingquality,andfinancialprotection.Howcantheefficiencyof thesealternativesbeassessedand compared inaway thatpolicy-makers canincorporateintotheirpolicychoices?

e) Inter-sectoral ormulti-sectoral actions.What guidance can be offered toministries of healthaboutwhere their limited time andmoney should be focused if theywant to influence othersectorstotakeactionsthatimprovehealth?

B. Incentivesforefficiencyandqualitya) Arethereformsofvalue-basedpaymentthatbetterencourageefficiency,qualityandresultsthan

existing payment systems. How much do they cost, do they have unintended negativeconsequences and could they be routinely incorporated into health systems without externalfinancing? This is not simply an unresolved question but a controversial issuewhere there arestrongproponentsandopponents,forexample,ofdifferentformsofresults-basedpayment.

b) Whatcapacitiesdocountriesneedtohavetobegintopurchasestrategicallyandwhatsystems(forexample,budgeting,accountingand legalsystems)needtobe inplacetosupport it?Whathasbeentheexperiencewhereitacountryhassoughttomovetowardsstrategicpurchasingwithoutthe requisite systems in place and is it feasible tomove forward in very resource-constrainedsettings?

C. MeasurementThere are major gaps in the availability of data to identify the extent and sources of

inefficiencyincountries,particularlylower-incomecountries,partlybecausefewcountriesroutinelymonitor theirownprogress in reducing inefficiencyandpartlybecause routinehealth informationsystemsproduceonlyafewofthenecessaryindicators.a) Howcancountriesdeterminewhichindicatorsarecriticaltotheirowneffortstoachievemore

withtheavailableresourcesandwhataretheinvestmentcostsofensuringtheycanbemonitoredregularly?

D. Politicaleconomya) Aretheregeneralizablelessonstobelearnedaboutwhysomeefficiencyreformsworkandothers

fail,orreformsworkinonecountryandnotinanother?b) Arethereapproachesthatwouldbeusefulforallcountriestotakewhendevelopingtheagenda

for improving efficiency tomaximize the chances of success, such as involving civil society orparliamentarians?

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E. Theefficiencyandsustainabilityofoptionstoimproveefficiency

Littleinformationisavailableonthecostsofthedifferentoptionsforimprovingefficiencytoincludealongsidethebenefitstoallowanassessmentofthemostefficientwayofimprovingefficiencyto be determined. Studies of payment for performance provide one example, and most of theliteraturehassimplereportedresults.

a) Howcancountriesrapidlyassessthecostsofthevariousoptionsforimprovingefficiency?Isthereanywaytheglobalcommunitycanassist?

F. Equityandefficiency

Some types of efficiency improvements can improve equity and some can exacerbateinequities.Sometimesitdependsonhowtheinterventionisdeliveredratherthanonthediseaseorhealthconditiontargetedorthetoolbeingused.Whatisrarelyassessedarethecostsandeffectsofdifferent ways of improving equity – recognizing that improving equity is a legitimate goal ofgovernment,andtheyshoulddoitinthemostefficientway.

b) How can countries rapidly assess the costs and impacts of the various options for reducinginequalitiesinhealth?Isthereanywaytheglobalcommunitycanassist?

X. RecommendationsEvery country has inefficiencies in their health systems and every country has technical

optionsforreducingthem.Basedonanassessmentofwhatisknownandwhatismissing,anumberofrecommendationsforimmediateactioncanbeformulated.Theyaredividedintoactionsthatneedtobetakenbycountriesandthosewheretheinternationalcommunityincludingfinancialpartnerswithlow-incomecountriesandresearcherscanassist.

Countries

§ Undertakeanassessmentofthemajorcausesofinefficiencyandthosethatarefeasibletochangeintheshort,mediumandlonger-term.

§ Developandimplementastrategyforimprovingefficiencyintheshorttomediumterm–thisshouldbepartofahealth financingstrategyalthoughsomeof theactionswillneedtobebroaderthanhealthfinancing.

§ Starttoputinplacethebackgroundinvestmentsthatneedtobemadetoensurethelonger-termoptions canbeundertaken–e.g. legislation, consultation, computerized informationsystems,staffskills.

§ Undertakeapoliticalaswellasatechnicalanalysistoguidewhichreformshavethegreatestchanceofsuccess,thenbuildsupportandnegateopposition.

§ Developasetofefficiencyindicatorsrelatingtothemaincausesofinefficiencyinthecountryandtheagendaforachievingmorefortheavailableresources.

§ Investinmethodstocollectthemandtoevaluateprogressregularly.§ Identifytheareasofpossibleinter-sectoralormulti-sectoralactionsthatwouldachievethe

largesthealthimpacts,andthepoliticalfeasibilityofinfluencingothersectorstoimplementthem(perhapsincollaborationwiththeministryofhealth).ThiswouldhelptheMinistryofHealth target the key ministries and make the best use of their own limited time andresources.

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Internationalcommunity(includingresearchersinallcountries)

§ Routinelyassessthecostsaswellasimpactofeffortstoimproveefficiencysothatcountriescandeterminetheefficiencyofdifferentoptionsforimprovingefficiency.Anassessmentofthefinancialsustainabilityofthedifferentoptionsisalsohelpful.

§ Developanagendatoidentifythecost-effectivenessofeffortstoredresshealthinequalitiesaspartoftheefficiencyandequitydiscussion.

§ Developmethodswhichcanbeusedtohelpcountriesdeterminewhichofthemyriadofinter-sectoralormulti-sectoralactionstoimprovehealthshouldbegivenpriorityforthelimitedtimeandfinancialresourcesavailabletoaMinistryofHealth.Thiswouldfeedbackintoitem5above.

§ Continue to invest in the technologies that might “shift the frontier” of possibilities”,identifyingfurtheropportunitiestoimprovehealthandfinancialprotectionatlowcost,suchasvaccinesforHepatitisCandHIV/AIDS.

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