Conceptualising and categorising efficiency

		_{Outputs / outcomes}
		Lower	Same	Higher
^Inputs	Lower	Ambiguous	More efficient	Much more efficient
	Same	Less efficient	Efficiency unchanged	More efficient
	Higher	Much less efficient	Less efficient	Ambiguous

_{^{In economic terms, efficiency describes how well inputs (i.e. physical or financial resources) are converted into valuable outputs.}}

If one process generates a greater amount of outputs with the same amount of inputs than an alternative process, it is more efficient. A process can also be more efficient if it produces the same amount of outputs with fewer inputs than an alternative process. Conversely, a process that requires more inputs than an alternative process to produce the same amount of resources is described as less efficient or inefficient. The relationship between relative inputs, outputs and efficiency is shown in Table 1.

In healthcare, inputs are financial or medical resources, whilst outputs are positive health outcomes. Healthcare is efficient if it minimises (“avoids”) unnecessary expenditure, morbidity or mortality. In the context of Table 1, avoiding unnecessary expenditure can be seen as reducing inputs, whilst avoiding unnecessary morbidity and mortality can be seen as increasing positive health outcomes.

Table 1: The relationship between inputs, outputs and efficiency.

This project adapted a framework from the Organisation for Economic Cooperation and Development (OECD, 2017b) to illustrate and categorise different types of healthcare inefficiency, their drivers and the relevant actors (see Figure 1).

The categories of inefficiency it describes include governance related waste, operational waste and wasteful clinical care, and stem from drivers ranging from poor decision making to deliberate fraud or deception. This framework was used to inform the identification of priority areas for the efficiency case studies.

Figure 1: Revised conceptual framework of waste and inefficiency. Adapted from OECD 2017; revisions shown in bold white.