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Improving Efficiency: Cutting the Fat
Another challenge is overconsumption. The rational use of medicines is a responsibility of doctors and patients alike. A recent study in Kazakhstan found that over 90 percent of the population self-medicates. Prescription guidelines and monitoring can help. When primary care is weak, these mechanisms are also weakened. In some cases, the challenge is compounded by direct payment of physicians by pharmaceutical companies in exchange for favorable prescription patterns. But some of the responsibility is on patients as well, who may be asked to pay higher copayments for brand-name drugs and should be targeted with information to help overcome potential bias against drugs with a certain country of origin.
No Silver Bullets Having seen the potential for cutting waste in hospitals and pharmaceuticals, we should also note that there are some commonly proposed “cures” for health inefficiency for which the evidence is not without important caveats. In principle, provider payment reforms such as the adoption of diagnosis-related groups can improve efficiency, but in practice, the evidence is not so clear (Street et al. 2011). More cost sharing, prevention programs, and competition are also frequently proposed as policy instruments for improving efficiency. But in each case, the evidence is mixed. Similarly, certain broad health system models are sometimes viewed as inherently more efficient, but a recent analysis has cast doubt on any such clear conclusions (OECD 2010). These are briefly summarized in table 5.3. TABLE 5.3
No Easy Answers for the Efficiency Agenda Potential efficiencyenhancing policy
Possible side effects
More cost sharing
Patients may cut back on preventive care and end up with higher rates of hospitalization; see box 4.1 for evidence. Ultimately likely to vary by service.
More prevention
Very important for improving health, but may not decrease (lifetime) costs; for example, smokers tend to have lower lifetime medical costs than nonsmokers because they live much shorter lives (Sloan et al. 2004). Overall, prevention may be no cheaper than treatment (Cohen, Neumann, and Weinstein 2008).
More insurer competition
May induce innovation and cut back on wasteful care, but could also result in higher systemwide administrative costs, higher prices due to loss of monopsony power, and cutbacks of “necessary care” such as prevention.
More provider competition
May improve incentives to cut costs, but this may be done by skimping on quality of care. Empirical evidence is ambiguous (Gaynor and Town 2012).
Type of health system in country X
There is more variation in efficiency within broad health system types than across them (OECD 2010).
Source: World Bank staff.
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