Efficiency of Primary Health Care Spending by Municipalities in the Metropolitan Region of Sao Paulo: A Comparative Analysis Pf DEA Models
Varela, Patricia Siqueira, de Andrade Martins, Gilberto, Review of Business
Purpose: This research aimed to assess the technical efficiency of municipalities in the metropolitan region of Sao Paulo regarding the application of public resources in primary health care actions, and to compare the results and information produced by three Data
Envelopment Analysis (DEA) models:
2. with non-controllable variables and use of regression analysis - NCVR; and
3. with non-controllable variables and based on the model by Banker and Morey (1986)-NCVBM.
Design/methodology/approach: The formulation of efficiency models for primary health care was based on the writings of classical authors on public good production and efficiency analysis. Two theoretical arguments of management control literature were essential in the analysis: (1) managers should be assessed according to the variables within their control, and (2) benchmarking standards permit adjusting assessments to the current operating experience and to the economic circumstances the entities face along a given period. In the DEA Basic Model, efficiency scores were calculated based on paid out expenses with primary health care procedures and the quantity of direct outputs produced by each sub-function of health care. Environmental variables were tested using correlation analysis, but the variable that indicated influence on the efficiency scores calculated in the Basic Model was population density, favoring decreased inefficiency. Two models with non-controllable variables were applied in the analysis: score adjustment based on regression analysis - NCVR, and the model based on Banker and Morey (1986)-NCVBM.
Findings: As for the information produced by the three DEA models, it will be difficult for municipalities with unfavorable environmental conditions to be part of the efficiency frontier in the basic model, with consequent punishment to their managers. Models with non-controllable variables permit assessing the influence of their manager's decisions in relation to the allocation of public resources on the results achieved. Between the two models bearing non-controllable variables, NCVBM not only adjusts the ranking of municipalities, but also gives the possibility of projecting improvement objectives regarding the use of resources in service rendering, and may therefore be considered the best model to assess public managers. The results also indicated that it was possible to raise the quantity of services rendered to the population considerably without the need of more budget resources.
Research limitations/implications: This study focused on primary health care, but other sub-functions of health should also be assessed, such as medium and high-complexity outpatient and hospital care. In addition, other regions in Sao Paulo should also be assessed to verify which environmental variables interfere in performance and how.
Practical implications: This study identifies the information that each model offers, as well as their limitations for efficiency analysis. It may contribute to the discussion on assessment of public managers' performance, since knowing the influence of environmental variables on the results of public policies will help define the criteria that take into consideration the horizontal inequalities among municipalities; it may also become support to the improvement of methodologies by external control entities, mainly Audit Courts.
Originality/value: Comparative performance assessment permits identifying management's weak points, as well as those aspects that might be taken as a reference for other jurisdictions, putting into practice one of the advantages of federal structures like the one in Brazil, i.e. learning through a range of experiences. This study contributed to indicate possibilities and restrictions for comparative performance evaluation when the three models of DEA are used.
The last decades have been marked by recent efforts to modernize public management, based on the dissemination of the principles of new public management, whose focus is on result-oriented management and efficient resource use. …