Assessing the Efficiency of Health Facilities in Indonesia

Despite increased expenditures in Indonesian health facilities since 1999, health outcomes remain relatively poor. Inefficiency in health facilities contributes to the rising cost of healthcare. This thesis uses an innovative combination of ratio and frontier analyses to ascertain the factors determining relative efficiency in Indonesian health facilities. Chapter 1 presents the aim of the thesis. Chapter 2 offers a description of Indonesia and its healthcare system, and Chapter 3 discusses the methods used and the theoretical background of the study. In Chapter 4, we review measurements of efficiency in empirical analyses conducted in low- and middle-income countries. We demonstrate that there is no consensus regarding the most appropriate technique to measure efficiency, though most existing studies have relied on ratio analysis and data envelopment analysis. The empirical findings in this thesis provide comprehensive analyses of the efficiency of both primary care facilities and hospitals; this study makes a distinct contribution as the first to use multiple national datasets. In Chapter 5, we combine Pabón-Lasso models and costing analysis to explore the characteristics of high-performing health facilities. In so doing, we demonstrate that it is feasible to measure efficiency using easily reproducible, readily understandable methods. In Chapter 6, we analyse efficiency in primary care facilities using frontier analysis, including both data envelopment analysis and stochastic frontier analysis. Chapter 7 uses frontier analysis to investigate efficiency in hospitals by considering the complexity (case mix index) and quality (mortality ratio) of healthcare services. The use of a multiple approach offers a way of cross-checking the consistency of the results. This empirical analysis enable us to conclude unambiguously and robustly that there exist significant associations between health facilities’ contextual factors and their estimated efficiency scores. Finally, Chapter 8 draws together the findings, assesses the policy implications, and comments on appropriate further research.