A Review of Drivers of Health System Efficiency

Innovators in markets around the globe are working to develop advancements that create greater health system efficiencies that lead to better patient outcomes. The December 2023 article “Analyzing the Efficiency of Health Systems: A Systematic Review of the Literature” involved a global search of relevant papers included on the PubMed and Google Scholar reference lists from 2000 to 2021 to assess the impact of these developments. The authors identified basic contributing factors in countries with varying GDPs, health systems, expenditures, and levels of care. ​

A key finding was that an estimated 20 to 40 percent of worldwide health system spending fails to reach intended uses due to inefficiency. This drains vital resources from health care provision and impedes efforts to attain goals such as universal health coverage. When high-efficiency practices are in place, policymakers, voters, taxpayers, and the organizations they represent feel more confident in allocating greater financial resources to health systems.

The authors focused their research on a specific type of efficiency known as technical efficiency – a measurable attribute that is essential in quantitatively assessing health system performance. Of 131 selected papers, 94 percent employed purely quantitative approaches, with the remainder employing mixed methods or qualitative (non-mathematical) approaches. Three of the qualitative papers involved surveys of stakeholders and their views on the sources and existence of inefficiencies in health systems. By contrast, quantitative approaches focused on numerical population and outcome distinctions, and graded system effectiveness through an inefficiency score on a scale of 1 to 100.
 
Many studies found that high population density resulted in increased technical efficiency. For example, in higher density health care catchment regions of Chile, the primary health care system displayed greater efficiency. A separate study that looked at 46 Asian countries found that countries with more than 200 people per square kilometer performed significantly better than those with 100 people per square kilometer or less. A key reason is that people needed to travel shorter distances to receive health care, which indicates that geographical proximity to care is a major factor in defining health system efficiency.

Interestingly, a number of studies found a negative association between system technical efficiency and population density. A study in Kenya theorized that lack of appropriate health care resources allocated to centers of higher population density led to compromised urban care. A study of municipalities in Finland presented similar findings, suggesting that bureaucratic inefficiency and care quality differences in urban neighborhoods could be factors.

In many studies, a country or region’s higher per capita income translated into greater technical efficiency. However, a significant number of studies found an opposite effect, with higher costs of care and higher levels of over-provision implicated in lower health system efficiency. This affected relatively high-income societies. Other factors contributing to increased health system efficiency included literacy and access to clean water and basic sanitation. When it came to financing care, health systems that relied on fragmented sources (e.g., multiple health insurance payers) were linked to lower health system efficiency. A higher share of public spending on health care had positive efficiency correlations, as did access to basic health insurance (or other prepayment health-financing mechanisms). Other policy factors increasing technical efficiency in countries such as El Salvador and China included generic prescribing, strong price regulation, and national essential drug list enforcement.

In sum, the literature highlights that health system efficiency is shaped by a complex interplay of demographic, economic, structural, and policy-related factors. While high population density and greater public investment can drive improvements, these benefits are not universal and may be offset by resource misallocation or bureaucratic inefficiencies. The findings underscore the need for tailored, context-specific strategies that reflect each system’s unique challenges and strengths. As global health systems strive toward universal coverage and improved outcomes, applying insights from both quantitative and qualitative research will be essential to designing more efficient, equitable, and sustainable models of care.