Efficiency of Health Care Systems: Stochastic Frontier Analysis Including Innovation Component

Abstrakt

The efficiency of health care system can be evaluated at three levels: the one related to the healing process itself, the organizational one (associated with the functioning of entities providing health care, such as hospitals) and the systemic one (the overall efficiency of health care system). The goal of this paper is to focus on the latter efficiency concept investigating health care systems’ performance at the macroeconomic level. In order to analyze this question we apply a parametric stochastic frontier model (SFA) enriched by the innovation component. This specification allows us to construct the health system efficiency ranking among OECD countries, including Poland. Our results limit the impact of raising health expenses and claim the importance of better resource allocation. We also find the positive effect of pharmaceutical innovation on health condition while the innovation related to medical procedures needs to be less time consuming to be efficient.