Evaluating Health System Efficiency using Data Envelopment Analysis: A case of Indian Healthcare System

Abstract

Purpose-With increased demand and restricted healthcare resources, it becomes important to take a step back and evaluate the efficiency of healthcare delivery. The present study aims to evaluate the health system efficiency of India by benchmarking it against its peers in BRICS countries and against OECD countries. Design/Methodology/Approach: The input and output variables required for measuring the efficiency of healthcare system were identified. A Data Envelopment Analysis (DEA) approach was used and efficiency frontier identified with the rankings of the BRICS and OECD countries. India is thus benchmarked against its peers (BRICS) and against OECD countries. Finding: India was found to operate at the efficiency frontier along with China, Russia, Brazil, and South Africa, however it ranked fourth. When benchmarked against OECD countries, India operates on the efficiency frontier along with Canada, Greece, Japan, Korea, Mexico, Spain, Sweden, Switzerland, Turkey, Great Britain, Chile and Israel. Countries like Germany, United States of America, Czech Republic, Slovakia and Lithuania operate at a lower healthcare efficiency and need to use their resources wisely. Practical/Research Implications: Developing countries like India can look to improve its healthcare system delivery by replicating best practices of healthcare systems from its peers and the top 10 OECD countries. Majority of the OECD countries in the top 10 have implemented universal health coverage, have higher physician and nurse density and higher hospital bed ratios. They are inclined towards branded drugs vis-à-vis generics and have follow evidence based medicine. From a theoretical perspective, it adds to the body of literature of DEA and health system efficiency. Originality/Value: This is a pioneer study that benchmarks India against its peers and against OECD countries drawing unique insights about healthcare efficiency