A NEXUS BETWEEN COST EFFICIENCY AND COST PRODUCTIVITY: A CASE STUDY OF HEALTH SYSTEMS OF DEVELOPED COUNTRIES

Abstract

The aim of the paper is to investigate cost efficiency and cost productivity growth of the nationalhealth systems from developed countries. The study employed an input oriented Data Envelopment Analysis (DEA) to measure the cost efficiency of the health systems using data on infant mortality rate, under five mortality rate and life expectancy at birth as health outcomes for the period 2011-2017 in developed countries. In the second part of the study cost Malmquist Total Factor Productivity index based on data envelopment analysis is used to assess health cost productivity changes over the same period for each country. Factors affecting the cost efficiency and cost productivity is also determined by using bootstrap truncated regression. The empirical results show that the health systems of developed countries are cost efficient with score 0.804. However, there is decline in cost productivity of the health system of these countries with 3.9 percent rate. The result of truncated regression show the significant effect of all the environmental factors.The results are useful for policy-makers in designing long-term health reform plan aimed to improve the performance of the health systems.