The objectives of this study were to explore different methods for quantifying the magnitude of technical and economic inefficiency in service provision by public sector providers and to identify institutional and behavioural factors which explain difference in efficiency. A variety of techniques were used to quantify the extent of inefficiency in service provision, including standard service indicators (length of stay, occupancy rate, turnover rate) average cost, and econometric cost and production functions. The results of the different methods were compared using rank correlation coefficients. Lasso diagrams were used to compare the relative performance of facilities. Other potential correlates of facility performance studied included a series of management indicators, which describe the characteristics of the facility manager, the system used for managing key inputs such as drugs and staff, and the characteristics of the environment. The study found that average costs of care in 1997 continued to be below international norms, but that there remained an important degree of variation among similar facilities, with ratios of high: low cost facilities ranging from 4.3 (for cost per patient day in complex inpatient facilities) to almost 30 (for outpatient visits in basic inpatient facilities). Differences in average length of stay and occupancy rate explain only a small proportion of the variation in facility cost. Indicators of management characteristics do not seem to explain much of the variation in costs either. In the latter part of the publication, explain the findings of the study.

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