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What does efficiency in healthcare delivery mean? Examples of two market failures

Posted On : October 08, 2021 Introduction: Economic efficiency measures system performance (Enrique & Marta, 2020); the Healthcare delivery system (HCDS) is no different. In non-biologic systems, the efficiency can be measured and optimized since all variables are predictable. However, efficiency becomes a complex and possibly unachievable task in a biological environment such as HCDS. The summary report will define the efficiency and examine the limitation of achieving efficiency in the healthcare delivery system. Definitions: Efficiency measures the adeptness of a system allowing identification of the inadequacies and opportunities for improvement. Economic efficiency minimizes cost and maximizes production for profit (Petrou, 2014). Healthcare is a commodity (Mills & Gilson, 2009).  Increased need and limited resources, environment, illnesses are forces on an equilibrium of efficiency that requires flexibility. These are why economically competitive markets fail to achieve healthcare efficiency (Johansen & van den Bosch, 2017). The concept of efficiency in health care has been described as Technical, Productive, and Allocative (Palmer & Torgerson, 1999). Extensive work has looked at special measures and populations for optimizing efficiency (Cylus & Papanicolas, 2016). Efficient systems require predictable input, components, processes, and output, unlike efficiency in HCDS. The differences include:
  • Biologic environments introduce variability in the system. Therefore, the HCDS efficiency will need to be flexible to diversity. Unfortunately, flexibility and efficiency counteract each other at industrial levels (Adler et al., 1999; AHRENS & CHAPMAN, 2004), and thus inefficiency is to be expected.
  • Efficiency can be measured at two points:
    1. Efficiency of delivery
    2. Efficiency of outcome
Efficiency in HCDS means providing the most cost-efficient healthcare to those in need. As equity is a pillar of the HCDS, efficiency and equity are opposing forces (Guinness et al., 2011). Therefore, it is critical to have the broader determinants of health into consideration on HCDS. This broad spectrum of variables, individual level, and upstream factors (Dahlgren G & Whitehead M, 1991)  will affect efficiency models applicable in one setting for a given population and inefficient in another (Hussey et al., 2009). Healthcare Market: The principle of maximizing profits applies to the four market types[1][2]. However, healthcare markets achieve Social Efficiency[3] and not economic efficiency (Folland & Goodman, 2013). This is due to Asymmetry of the information, Adverse selection, Moral hazard, Independent supply and demand stresses, and Externalities (Mwachofi & Al-Assaf, 2011). Examples of Market Failure At the onset of the pandemic, most governments, WHO assumed the costs of COVID-19 vaccination as they became available. Social media has disseminated incorrect information on vaccines (Lin et al., 2020; Wajahat Hussain, 2020). The Asymmetry of the information (AOI) has resulted in a sizable portion of the eligible population not being vaccinated (Coe et al., 2021; Malik et al., 2020). HCDS’s failure is a public relations problem and a breakdown in the trust of institutions (Soares et al., 2021). Adverse selection (AS) compounds the AOI. There have been pockets of efficiency in vaccination with no equity for the world population (Mathieu et al., 2021). This is due to the AOI and the structural inequities in HCDS (Hyder et al., 2021). Few countries are offering vaccine boosters, where most of the world’s population has not received any.   References: Adler, P. S., Goldoftas, B., & Levine, D. I. (1999). Flexibility Versus Efficiency? A Case Study of Model Changeovers in the Toyota Production System. Organization Science, 10(1), 43–68. https://doi.org/10.1287/orsc.10.1.43 Adler, P. S., Goldoftas, B., & Levine, D. I. (1999). Flexibility Versus Efficiency? A Case Study of Model Changeovers in the Toyota Production System. Organization Science, 10(1), 43–68. https://doi.org/10.1287/orsc.10.1.43 AHRENS, T., & CHAPMAN, C. S. (2004). Accounting for Flexibility and Efficiency: A Field Study of Management Control Systems in a Restaurant Chain*. Contemporary Accounting Research, 21(2), 271–301. https://doi.org/https://doi.org/10.1506/VJR6-RP75-7GUX-XH0X Coe, A. B., Elliott, M. H., Gatewood, S. B. S., Goode, J. V. R., & Moczygemba, L. R. (2021). Perceptions and predictors of intention to receive the COVID-19 vaccine. Research in Social and Administrative Pharmacy. https://doi.org/10.1016/j.sapharm.2021.04.023 Cylus, J., & Papanicolas, I. (2016). Health System Efficiency 46 How to make measurement matter for policy and management. London. Dahlgren G, & Whitehead M. (1991). Dahlgren and Whitehead (1991) – Policies and strategies to promote social equity in health. Stockholm: Institute for future studies. Dahlgren G, Whitehead M. Retrieved from https://core.ac.uk/display/6472456 Enrique, B., & Marta, B. (2020). Efficacy, Effectiveness and Efficiency in the Health Care: The Need for an Agreement to Clarify its Meaning. International Archives of Public Health and Community Medicine, 4(1). https://doi.org/10.23937/2643-4512/1710035 Folland, S., & Goodman, A. (2013). The Economics of Health and Health Care. Oakland: Pearson. Guinness, L., Wiseman, V., & Wonderling, D. (2011). Introduction to health economics. (2nd ed. /). Maidenhead: McGraw-Hill/Open University Press. Hussey, P. S., de Vries, H., Romley, J., Wang, M. C., Chen, S. S., Shekelle, P. G., & McGlynn, E. A. (2009). A systematic review of health care efficiency measures. Health Services Research, 44(3), 784–805. https://doi.org/10.1111/j.1475-6773.2008.00942.x Hyder, A. A., Hyder, M. A., Nasir, K., & Ndebele, P. (2021). Inequitable COVID-19 vaccine distribution and its effects. Bulletin of the World Health Organization, 99(6), 406-406A. https://doi.org/10.2471/BLT.21.285616 Johansen, F., & van den Bosch, S. (2017). The scaling-up of Neighbourhood Care: From experiment towards a transformative movement in healthcare. Futures, 89, 60–73. https://doi.org/https://doi.org/10.1016/j.futures.2017.04.004 Lin, C. Y., Broström, A., Griffiths, M. D., & Pakpour, A. H. (2020). Investigating mediated effects of fear of COVID-19 and COVID-19 misunderstanding in the association between problematic social media use, psychological distress, and insomnia. Internet Interventions, 21. https://doi.org/10.1016/j.invent.2020.100345 Malik, A. A., McFadden, S. A. M., Elharake, J., & Omer, S. B. (2020). Determinants of COVID-19 vaccine acceptance in the US. EClinicalMedicine, 26. https://doi.org/10.1016/j.eclinm.2020.100495 Mathieu, E., Ritchie, H., Ortiz-Ospina, E., Roser, M., Hasell, J., Appel, C., … Rodés-Guirao, L. (2021). A global database of COVID-19 vaccinations. Nature Human Behaviour, 5(7), 947–953. https://doi.org/10.1038/s41562-021-01122-8 Mills, A., & Gilson, L. (2009). Health Economics for Developing Countries: A Survival Kit. Esocialsciences.Com, Working Papers. Mwachofi, A., & Al-Assaf, A. F. (2011). Health care market deviations from the ideal market. Sultan Qaboos University Medical Journal, 11(3), 328–337. Retrieved from https://pubmed.ncbi.nlm.nih.gov/22087373 Palmer, S., & Torgerson, D. J. (1999). Economic notes: definitions of efficiency. BMJ (Clinical Research Ed.), 318(7191), 1136. https://doi.org/10.1136/bmj.318.7191.1136 Petrou, A. (2014). Economic Efficiency. In A. C. Michalos (Ed.), Encyclopedia of Quality of Life and Well-Being Research (pp. 1793–1794). Dordrecht: Springer Netherlands. https://doi.org/10.1007/978-94-007-0753-5_818 Soares, P., Rocha, J. V., Moniz, M., Gama, A., Laires, P. A., Pedro, A. R., … Nunes, C. (2021). Factors associated with COVID-19 vaccine hesitancy. Vaccines, 9(3). https://doi.org/10.3390/vaccines9030300 Wajahat Hussain. (2020). Role of Social Media in COVID-19 Pandemic. The International Journal of Frontier Sciences, 4(2), 59–60. https://doi.org/10.37978/tijfs.v4i2.144 [1] Perfect competition, Monopoly, Oligopoly, Monopolistic competition [2] Control of Total revenue (TR) and Cost (TC) to maximize profit [3] An equilibrium point (Pareto Optimality) where Social Marginal Benefit (SMB) and the Cost (SMC) are equal

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