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Article Excerpt
Rising health care costs are driving increases in health insurance premiums, the erosion of private coverage (Chernew, Cutler, and Keenan 2005), and strains on the fiscal solvency of public insurance programs (Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Insurance Trust Funds 2007). At the same time, evidence suggests that the efficiency of the U.S. health system--defined by the Institute of Medicine (IOM) as "avoiding waste, including waste of equipment, supplies, ideas, and energy"--is low (IOM 2001; Fuchs 2005; Bush 2007). Costs vary widely across geographic areas, but the differences are not associated with more reliable delivery of evidence-based care or better health outcomes (Fisher et al. 2003a, b). International comparisons are also often used to question the efficiency of the U.S. health system (Davis et al. 2007).
These concerns have created tremendous pressure to measure the efficiency of health care providers and systems so that it can be evaluated and improved (Cassel and Brennan 2007). Health care quality is now regularly measured, reported, and rewarded with incentive payments. Efficiency measurement has lagged behind. Increasingly, however, large employers have been demanding that health plans incorporate efficiency profiles into their products and information packages alongside quality profiles (Milstein 2004). Health plans have been using provider efficiency ratings in network selection, pay-for-performance programs, or to steer patients toward efficient providers through lower copayments and/or public reporting (Iglehart 2002; American Medical Association 2007; Draper, Liebhaber, and Ginsburg 2007).
Efficiency measurement is also likely to be used increasingly in public programs. President Bush issued an Executive Order in 2006 stipulating that federal health care programs promote quality and efficiency and increase the transparency of relevant information for consumers (The White House 2007). The Medicare Payment Advisory Commission (MedPAC) has advocated using efficiency measurement to improve value in the Medicare program (MedPAC 2007). The IOM included efficiency as one of six aims for the 21st-century health system (IOM 2001).
Despite widespread interest in evaluating efficiency, considerable uncertainty exists about whether the methods are sufficiently well developed to be used outside the research laboratory (Milstein and Lee 2007). First, the term efficiency is used by different stakeholders to connote various constructs. Second, little is known about the range of methods that exist to measure efficiency and how well available efficiency metrics capture the constructs of interest (The Leapfrog Group and Bridges to Excellence 2007). Payers and purchasers have begun to use efficiency measures despite these uncertainties. Proponents of efficiency measurement seek to "learn on the job" and improve measurements through use. Those who are being evaluated on these metrics worry that the lack of conceptual clarity and the limited methodological assessments increase the likelihood that results from the metrics will create distortions in patterns of care seeking and service delivery, adding to distortions related to current payment systems (O'Kane et al. 2008).
To address the lack of clarity in the concepts and methods of efficiency measurement, we conducted a systematic review of existing efficiency measures and characterized them using a typology we developed. Our work was designed to reach a wide variety of stakeholders, each of which faces different pressures and values in the selection and application of efficiency measures. This paper is intended as the first of several steps that are necessary to create a common understanding among these stakeholders about the adequacy of tools to measure efficiency.
METHODS
We searched for potential measures of health care efficiency in the published literature and "gray" literature, interviewed a sample of vendors who have developed measures, and characterized potential measures according to our typology. This article is based on an Evidence Report prepared for the Agency for Healthcare Research and Quality (McGlynn et al. 2008).
Literature Search
We searched the MedLine and EconLit databases for published articles in the English language that appeared in journals between January 1990 and May 2008 and involved human subjects. Search terms included efficiency, inefficiency, productivity, and economic profiling. We also performed "reference mining" by searching the bibliographies of retrieved articles looking for additional relevant publications. Members of the project team worked closely with a technical expert panel and librarians to refine the search strategy. These searches were conducted during December 2005 then updated in May 2008.
Gray Literature
Because some efficiency measures might not appear in the published literature, we relied on experts to develop a list of vendors of measurement products and other organizations that had developed or were considering developing their own efficiency measures. We contacted key people at these organizations to collect the information necessary to describe and compare their efficiency measures to others we abstracted from publications.
Study Eligibility
In order to be eligible for inclusion, a published study had to present empirical information on an efficiency measure, which we defined as the relationship between a specific product of the health care system (also called an output) and the resources used to create that product (also called inputs). By this definition, a provider in the health care system (e.g., hospital, physician) would be efficient if it was able to maximize output for a given set of inputs or to minimize inputs used to produce a given output. The measured inputs and outputs are assumed to be comparable (discussed in more detail below).
Classification of Measures
We created a typology of efficiency measures to characterize the measures abstracted in the systematic review (McGlynn et al. 2008). The typology has three levels:
* Perspective. who is evaluating the efficiency of what entity and what is their objective?
* Outputs: what type of product is being evaluated?
* Inputs: what inputs that are used to produce the output are included in the measure?
The first tier in the typology, perspective, requires an explicit identification of the entity that is evaluating efficiency, the entity that is being evaluated, and the objective or rationale for the assessment. Each of these three elements of perspective is important because different entities have different objectives for considering efficiency, have control over a particular set of resources or inputs, and may seek to deliver or purchase a different set of services. In classifying measures identified through the scan, however, it was generally feasible only to identify the entity being evaluated. Users of measures should be explicit about their purposes in using efficiency metrics.
The second level of the typology identifies the outputs of interest and how they are measured. We distinguish between two types of outputs: health services (e.g., visits, drugs, and admissions) and health outcomes (e.g., preventable deaths, functional status, and clinical outcomes such...
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