Technical efficiency in the use of health care resources: a comparison of OECD countries

Abstract

Our paper analyzes technical efficiency in the production of aggregate health outcomes of reduced infant mortality and increased life expectancy, using Organization for Economic Cooperation and Development (OECD) health data. Application of data envelopment analysis (DEA) reveals that some countries achieve relative efficiency advantages, including those with good health outcomes (Japan, Sweden, Norway, and Canada) and those with modest health outcomes (Mexico and Turkey). We conclude the USA may learn from countries more economical in their allocation of healthcare resources that more is not necessarily better. Specifically, we find that the USA can substantially reduce inputs while maintaining the current level of life expectancy.