Abstract
The increasing costs of healthcare arising largely from the growing population and emergence of non-communicable diseases have exerted pressure on healthcare budgets in poor countries. With a funding gap of 7% to realize WHO recommended target of 15 percent of GDP in Uganda, there is a need for hospitals to be efficient in allocation of financial resources in order to provide the required level of healthcare services. Most studies on Uganda have focused on the technical inefficiency of general hospitals and evidence on their allocative inefficiency is limited. Understanding the sources of inefficiency in the allocation of finances in general hospitals in Uganda is important to improve their performance. The purpose of this study was to determine the allocative inefficiency of the general hospitals in Uganda in order to provide a source of misuse of public allocations to a particular general hospital. Panel data from 22 general hospitals for the period 1997-2007 were used. Allocative inefficiency was estimated using Stochastic Frontier Analysis. The findings show that general hospitals are systematically allocatively inefficient in distributing the public funds given to them. The allocative inefficiencies value is high on payments of employee benefits (34.8 percent), followed by the purchase of drugs (29.2%) and lastly, costs on utilities like electricity and water (14.1%). To address the existing allocative inefficiencies, general hospitals in Uganda can improve the process of hiring of labour and management of staff payroll; monitor procurement of drugs, and reduce wastages in the use of utilities.
Highlights
Healthcare is one of the basic human needs which is very limited in supply in poor countries and requires allocations and institutions to organise those allocations
This study puts an emphasis to scrutinise the allocative inefficiency of the general hospital subsector in Uganda because; first, general hospitals use up to 60 percent of resources allocated to the hospital sector in Uganda and secondly, allocative efficiency is a primary basis upon which hospitals can access inputs to produce healthcare
Fuelled by rising health care expenditures, greater demand for healthcare due to the growing population, emerging non communicable diseases (NCD) and limited annual expenditure of less than 8 percent of the GDP, attention should be turned towards institutional health care efficiency and its measurement
Summary
Healthcare is one of the basic human needs which is very limited in supply in poor countries and requires allocations and institutions to organise those allocations. They need a constant, adequate and timely supply of inputs for this purpose and yet resources are scarce. The theoretical framework concerns the efficiency of allocating budgetary votes as a proportion of the total cost to a given set of inputs used in the provision of healthcare to an observed set of patients. The independent variables are the amounts of units of these inputs employed by the hospitals (number of doctors, nurses, other employees and beds) and the number of patients treated plus the size of inefficiency. This can be expressed as in Lave and Lave (1984) as follows; TCit PitXit−1
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
