Efficiency is one of the central preoccupations of health policy-makers and managers, and justifiably so. Inefficient care can lead to unnecessarily poor outcomes for patients, either in terms of their health, or in their experience of the health system. What is more, inefficiency anywhere in the system is likely to deny health improvement to patients who might have been treated if resources had been used better. Improving efficiency is therefore a compelling policy goal, especially in systems facing serious resource constraints. The desire for greater efficiency motivates a great deal of decision-making, but the routine use of efficiency metrics to guide decisions is severely lacking. To improve efficiency in the health system we must first be able to measure it and must therefore ensure that our metrics are relevant and useful for policy-makers and managers. In this book the authors explore the state of the art on efficiency measurement in health systems and international experts offer insights into the pitfalls and potential associated with various measurement techniques. The authors show that: 1) the core idea of efficiency is easy to understand in principle -- maximizing valued outputs relative to inputs, but is often difficult to make operational in real-life situations; 2) there have been numerous advances in data collection and availability, as well as innovative methodological approaches that give valuable insights into how efficiently health care is delivered; 3) our simple analytical framework can facilitate the development and interpretation of efficiency indicators.

The authors use examples from Europe and around the world to explore how policy-makers and managers have used efficiency measurement to support their work in the past, and suggest ways they can make better use of efficiency measurement in the future. The study came out of the Observatory's LSE hub. It links to a forthcoming study offering further insights into how to develop and interpret policy relevant efficiency metrics and to the earlier volumes on performance measurement. It will be of considerable use to policymakers and their advisors, health care regulators, patient representative groups, managers and researchers.