Assessing health facility performance in Indonesia using the Pabon Lasso Model and unit cost analysis of health services

Total health care costs have dramatically increased in Indonesia and health facilities consume the largest share of health resources. This study aims to provide a better understanding of the characteristics of the best performing health facilities and identify potential drivers of service efficiency. We employ four cross-sectional national Indonesian datasets for 2011 and analysed 200 hospitals and 95 health centres. We first apply the Pabón Lasso Model to assess the relative performance of health facilities in terms of bed occupancy rate and the number of admission per bed; the model groups health facilities into four sectors representing different levels of productivity. We then use a step-down costing method to estimate the cost per outpatient visit, inpatient, and bed-days in hospitals and health centres. We also apply bivariate analyses, including difference and correlation tests to identify the internal and external factors affecting health facility performance. Forty percent of hospitals and 33 percent of health centres were located in the high performing sector of the Pabón Lasso model. A wide variation in unit costs across health facilities present a basis for benchmarking and identifying relatively efficient units. The major components of cost were human resources and materials such as pharmaceuticals and medical supplies. Combining the unit cost analysis and Pabón Lasso model, we find that health facility performance is likely affected by both internal (size and capacity, financing, ownership, accreditation status, and staff availability) and external factors (economic status, market competition, population education level, location, and insurance coverage). Our study demonstrates that it is feasible to identify the best performing health facilities and provide information about how to improve efficiency using simplistic methods.