Common Efficiency Measures

Measuring efficiency is a difficult business. As AHRQ,  “In most cases, individuals and firms will define efficiency as a relationship between what it costs them and what service or outcome they receive, rather than as a trait inherent in the provider.”

Further, efficiency can be measured as either production efficiency or allocative efficiency.  “For example, a physician may produce CT scans efficiently in her office, but the physician may not appear efficient to a health plan if a less expensive diagnostic test could have been substituted in some cases.”

This table lists some of the more common efficiency measures.


  1. The issue with efficiency is that it does not necessarily measure effectiveness. Take physician efficiency–a physician may be able to churn through 50% more patients than his slower partner, but if he is not ordering the right tests, making the right diagnosis etc., he is not effective. Therefore the metric can lead to unintended consequences–seeing more patients, but poor patient care.

  2. I agree. However, measuring quality (or effectiveness) is often difficult in practice.

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