The efficiency of the local health systems: investigating the roles of health administrations and healthcare providers

The analysis of efficiency in healthcare has largely focused either on individual healthcare providers, or on sub-national health systems conceived as a unique decision making unit. However, in hierarchically organised national health services, two separate entities are responsible for turning financial resources into services at the local level: health administrations and healthcare providers. Their separate roles and the one of health administrations in particular have not been explicitly considered in efficiency analysis.
We applied Stochastic Frontier Analysis to district-level panel data from Mozambique to assess districts efficiency in delivering outpatient care. We first assessed the efficiency of the whole district considered as an individual decision making unit, and then we assessed separately the efficiency of health administrations and healthcare providers within the same district. We found that on average only 73% of the outpatient consultations deliverable with the given inputs were realized, with large differences in performance across districts. Individual districts performed differently in administrative or healthcare delivery functions. On average, a reduction of administrative inefficiency by 10 percentage points, for a given budget would increase by 0.2% the volume of services delivered per thousand population per year. Identifying and targeting the specific drivers of administrative inefficiencies can contribute to increase service delivery at local level.