Equitable resource allocation and operational efficiency evaluation

In a healthcare system, resource allocation mechanisms should promote efficiency, improve quality of care and reduce practice variation. This paper presents a framework that has been used at the US Department of Veterans Affairs, VA Healthcare Network Upstate New York, to guide resource allocation and productivity assessment since 1999. It synthesises the latest developments in the field of healthcare finance and stochastic frontier analysis and generalises the traditional concept of productivity to include overutilisation or over-consumption of resources as part of inefficiency. Objective rather than subjective information is employed to predict resource need at the hospital level and to assess the operational efficiency of hospitals.