Health Finance: Measurement of Cost Efficiency of Health Subdistrict Offices in Thailand

Abstract

This paper is part ofa research program supported by the Health Research Institute for Health Security, with the objectives to monitor and evaluate the efficiency of health subdistrict offices in Thailand. Cost efficiency was empirically investigated based on primary surveyed data comprising 246 units operated in 12 provinces. First, descriptive statistics related to outputs (4 variables) and cost (3 variables inclusive of wages and salaries, compensation to officers, and operating expenses) are presented and discussed. All revenue and expense figures refer to fiscal year 2008. Two types of efficiency models (namely SCF and DEA) based an the input-orientation approach were applied to estimate the efficiency scores. We found that 45 units lied on the cost frontier and that represented 18 percent of the total units; in most cases, efficiency scores (DEA, VRS assumption) ranged from 0.60 to 0.75 and averaged to 0.69-implying that there was an ample room for cost-saving, specifically 31 percent, ifoutput slack or excess input were eliminated thus implying the scope for management improvement. Our estimates should be considered preliminary and an in-depth investigation needs to be taken in order further to understand the special circumstances and uncontrollable factors that might have affected the higher cost to those units, but our models failed to take note. The last section discusses policy implications and the health decentralization program in Thailand, which is a topic of policy interest. Improving the efficiency ofpublic agencies and effective public service delivery are among the goals of Thailand's public sector reform. Over the past decade, devolution of responsibilites from central agencies to local govemment units have fairly succeeded in areas of public infrastructure and social welfare-but have been less successful in primary education, public health, and environmental regulation. The transfer of the health subdistrict office is high on the national agenda, and the National Decentralization Committee strongly endorses this connection, it is important to disseminate information related to health subdistrict management, budgeting, and financing to the public, especially local
administrators.