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

The analysis of efficiency in health care has largely focussed either on individual health care providers, or on sub-national health systems conceived as a unique decision-making unit. However, in hierarchically organized national health services, two separate entities are responsible for turning financial resources into services at the local level: health administrations and health care 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 (2008-2011) to assess district 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 health care providers within the same district. We found that on average only 73% of the outpatient consultations deliverable using available inputs were realized, with large differences in performance across districts. Individual districts performed differently in administrative or health care delivery functions. On average, a reduction of administrative inefficiency by 10 percentage points, for a given expenditure 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.