Potential determinants of health system efficiency: Evidence from Latin America and the Caribbean

This paper examines the levels of health system efficiency and their possible determinants across Latin American and Caribbean (LAC) countries using national-level data for those countries, as well as for other emerging and developed countries. The data are analyzed using data envelopment analyses and econometric advances that yield reliable estimations of the relationship between system efficiency and its potential determinants. We find that there is substantial room for efficiency improvements in the health system of most LAC countries. For example, LAC countries could improve life expectancy at birth by about five years on average at current public spending levels if they followed best practices. Furthermore, the paper assesses what factors amenable to policy act as the main possible levers for some countries to be able to translate a given level of health financing into better performance on access to care and health outcomes. Our econometric analyses suggest that efforts to increase health system efficiency could be focused in a few key policy areas associated with broader access to health services and better outcomes. These areas include general governance aspects, in addition to improvements in specific dimensions of the quality of health system institutions, notably stronger reliance on results-based management in the production of healthcare goods and services.