Measuring health indicators and allocating health resources: a DEA-based approach

This paper suggests new empirical DEA models for the measurement of health indicators and the allocation of health resources. The proposed models were developed by first suggesting a population-based health indicator. By introducing the suggested indicator into DEA models, a new approach that solves the problem of health resource allocation has been developed. The proposed models are applied to an empirical study of Taiwan's health system. Empirical findings show that the suggested indicator can successfully accommodate the differences in health resource demands between populations, providing more reliable performance information than traditional indicators such as physician density. Using our models and a commonly used allocation mechanism, capitation, to allocate medical expenditures, it is found that the proposed model always obtains higher performance than those derived from capitation, and the superiority increases as allocated expenditures rise.