Efficiency in Healthcare

Question

I do not want you to write the introduction or the conclusion parts of the paper. What I want in this 6 pages is only the "body" part of the paper, which I can combine with my own introduction and conclusion pages.

Keep in mind that a literature review is different from a standard research paper. In a literature review, the focus is on SUMMARIZING and CRITIQUING what has been researched, rather than proving a thesis. I need no lesser than 6 sources nor more than 10. Do not forget, rather than citing many sources within a paragraph to explain that concept, I want you to explain each paper (including methodology) so that I know what was done in the paper and HOW and WHY they reach the conclusion they reach. Again, I want you to explain the methodology; for example, a source may talk about what kind of model a country uses in order to reach efficiency, and I would like you to indicate this model step by step in the paper and what conclusion they reach.

Answer

Efficiency in Healthcare

Maynard states that In the UK, the National Service has undergone many transformations that have led to an improvement in healthcare efficiency (1434). Public funding of all healthcare systems has never been scrapped, though. The main goal of healthcare reformers has been to improve the efficiency in resource allocation through the creation of competition in the provision of healthcare services. Maynard notes that competition on the supply side of the healthcare market has increased because of the introduction of General Practice Fund Holders (GPFH), and Trust hospitals, which are more autonomous (1438).

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            In a study of improvements in the UK healthcare systems, Maynard analyzes the policy contradictions that emerge in the process of implementing reforms, the incomplete manner in which population-weighted funding is utilized and the absence of proper strategies in the way GPFHs are developed. GPFHs are often considered to be the catalysts and mavericks as far as new healthcare structures in the UK are concerned. The main challenges that are highlighted as the greatest obstacles in the process of improving efficiency include the poor articulation of contracting and pricing rules and maintenance of highly skilled and planned capital and labor markets that can facilitate resource allocation, cost control and proper articulation of various market rules.

            There are many lessons that future innovators of efficient healthcare systems can derive from the UK healthcare reform process. With regard to this observation, Maynard poses several questions that can guide these future innovators (1440). Some of these questions relate to the regulation of the healthcare market, management of healthcare transaction costs, sequencing of reforms, essential ingredients for the reform process and the need for investment in healthcare education.

            Chang et al made use of Data Envelopment Analysis (DEA) in an evaluation of the level of success of the National Health Insurance Program (NHI) with regard to the operational efficiency of various district hospitals in Taiwan (483). They found out that, on average, there was a decrease in the efficiency of district hospitals in Taiwan after the implementation of NHI programs.

            Before the NHI program was put in place in 1995, there were about 13 health insurance schemes that covered about 60% of the Taiwan population. The remainder of the population had to pay to get any form of treatment. In March 1995, the Legislative Yuan of Taiwan introduced the NHI Act, which paved way for the introduction of the NHI program. 

            Chang et al cites three main reasons for the establishment of the NHI program: (a) the expand the reach of health insurance to the entire Taiwan population, (b) to improve the quality of healthcare through competition among healthcare providers, and (c) to control costs and to promote better ways of resource utilization among all hospitals through gradual implementation of the global budget payment systems (485). It was expected that this would ensure that health care services are offered at the lowest possible price without the quality of service being compromised.

            Chang et al note that the primary source of data for their research was the annual survey that the Taiwan Department of Health conducts in order to guide its policy of medical manpower and facility development (491). During the 1996 survey, there were 773 hospitals in the entire Taiwan area and 578 of them had been accredited. The annual survey included physical items such as the number of patient beds, number of nurses, number of physicians, number of patient days and number of ambulatory visits.

            Elsewhere, Aday et al sought to evaluate the effectiveness, equity, and efficiency of behavioral health care and to offer a guide in the assessment of today’s state-of-the-art research in this area (25). The foundation of their research was the previous conceptual work by these authors in the identification and identification of methods and concepts of healthcare research and policy analysis for purposes of assessment of the healthcare system performance.

            Two main assumptions were made: (a) the behavioral healthcare services must look at not just patients who are a manifestation of behavioral health risks, but also the population, and (2), the delivery system should address more than just acute, treatment-oriented behavioral healthcare treatments to include both aftercare services for both primary prevention and chronic conditions that keep relapsing.

            The study revealed the absence of a comprehensively coordinated care continuum, substantial variation in financial and policy incentives that can encourage the development and poor definition and articulation of goals and objectives of outcomes. Current research reflected considerable imprecision in the conceptualization and measurement of efficiency, effectiveness and equity criteria. Furthermore, it was noted that the three criteria (effectiveness, efficiency, and equity) are yet to be examined together in the process of evaluating system performance. 

            From this research, Aday et al concluded that the first era in behavioral healthcare was characterized by focus on cost savings in many managed care alternatives; the second one is focusing on outcomes and quality; and the third one must consider the thorny issues of access to behavioral healthcare and equity, especially for people who are vulnerable and seriously ill (26).

            Enthoven and Tollen investigated the nature of competition in the U.S healthcare system where they noted that the current model is not working in a competitive manner (420). They pointed out the rising costs of healthcare and the fact that quality has not yet reached the optimal level. It has therefore been proposed that it is important to eliminate provider networks and instead, encouraging financially responsible consumers who are informed, to choose the provider who best meets their needs for each condition.

Enthoven and Tollen argue that this “solution” will further fragment and distort coordination in the healthcare delivery system (420). Instead, the market should be in such a way that integrated delivery systems are encouraged, whereby incentives are offered to teams of professionals so as to enable them to provide efficient, properly coordinated, evidence-based healthcare that is facilitated through today’s information technology (421).

The methodology used was in the form of empirical research where literature on healthcare competition was reviewed. The areas in which literature was reviewed include competition among various integrated delivery systems, the role of financial incentives and its effect on quality, public discourse on individual-level competition, choice of providers and the role of responsible choices among consumers.

Afonso and St. Aubyn addressed the issue of efficiency in health and education sector in several OECD countries, whereby the applied two alternative non-parametric methodologies: DEA (Data Envelopment Analysis) and FDH (Free Disposable Hull), two critical areas whereby public expenditures is very critical in determining the efficiency. When the efficiency frontier was being estimated, the focus was put on measures relating to quantity inputs. This approach was considered to be advantageous in that although a country may be efficient in terms of technical ability, it may appear inefficient if expensive inputs are used.

According to Afonso and St. Aubyn, the best analytical methods and efficient outcomes in all sectors seem to cluster around very few core countries, though for different reasons: Korea, Japan, and Sweden. The research was done through an aggregate framework so that international comparisons of performance in terms of expenditure could be used to estimate different frontiers of efficiency. 

Previously, researchers used a variety of methodological approaches, including Free Disposable Hull analysis, econometric estimates, and parametric approaches. FDH and DEA approaches are very commonly used by various decision-making units, be they public organizations, non-profit organizations, and firms where conversion of inputs into outputs takes place.

In this research, 11 out of the 24 countries that were analyzed were found out to be efficient in terms of healthcare provision. They include Denmark, France, Canada, Japan, Korea, Norway, Spain, Portugal, Sweden, the United States, and the United Kingdom. Norway and Japan were found to be among the best performers. The outcomes for the United States, Denmark and Portugal did not have particularly striking outcomes, but the combination of different resources was somehow atypical.

From these results, the reasons why some small countries dominated the efficiency frontier were determined. For instance, although Korea had allocated few resources into the health sector, it had very impressive results. Spain Canada and the United Kingdom had allocated lower than average funds for health yet they had better than average-level efficiency outcomes. France was considered to be essentially a good performer. The efficient group under the DEA approach was smaller than that of the FDH approach. The most striking conclusion reached in this research is that the inefficient provision of healthcare services is closely linked to public sector inefficiency.

Stano examined HMOs (Healthcare Maintenance Organizations) using Coase’s theory of the firm and made the conclusion that HMOs have similar operating characteristics with collective goods (607). The theoretical framework was used to evaluate the efficiency and equity characteristics of HMOs that operate in a competitive environment. The study also addressed other concerns that are increasingly being associated with various elements of managed care.

Using Coase’s classic theory of the firm, Stano shows how managerial coordination f healthcare is becoming less expensive for many patients compared to market coordination. He explores Coase’s ideas using a simple example, for instance, the local supermarket, whereby managers make the decision on the products that they are going to stock, store hours, advertising, number and expertise of workers, inventory levels, and where to position the items.

In Coase’s theory, the alternative of a managerial decision whereby space is leased out space to independent entrepreneurs by a specialized firm is explored in the context of provision of healthcare services. Stano states that through leasing out of space, the independent entrepreneurs can perform even more specialized tasks. When the independent entities are many, they are coordinated by market forces in order to produce high-quality products, thus improving efficiency.

Works Cited

Aday, Lu Ann.  Begley, Charles. Lairson, David. Slater, Carl. Richard, Alan. and Montoya, Isaac. “A Framework for Assessing the Effectiveness, Efficiency, and Equity of Behavioral Healthcare,” The American Journal of Managed Care, 5.Special Issue (1999): 25-44.

Afonso, Antonio and St. AubynMigual. “Non-parametric approaches to education and health efficiency in OECD countries,” Journal of Applied Economics, 8.2 (2005): 227-246.

Chang, Hsihui., Chang, Wen-Jing., Das, Somnath.And LiShu-Hsing. “Health care regulation and the operating efficiency of hospitals: Evidence from Taiwan,” Journal of Accounting and Public Policy 23.1 (2004): 483–510.

Enthoven, Alain. Anatolian Laura. “Competition in Health Care: It Takes Systems to Pursue Quality and Efficiency” Health Affairs. Web Exclusive accessed from http://healthaff.highwire.org/cgi/reprint/hlthaff.w5.420v1.pdf on May 8, 2010. 420-433

Maynard, Alan. “Can competition enhance efficiency in health care? Lessons from the reform of the U.K. National Health Service” Social Science & Medicine, 39.10 (1994): 1433-1445.

Stano, Miron. HMOs and the Efficiency of Healthcare Delivery, The American Journal of Managed Care, 3.4 1997): 607-613.