Concept of Productive Efficiency In Health Revisited

Speaker: Eric Nauenberg

Date/Time: November 13th, 10 AM – 12 PM

Location: Health Sciences Building (155 College Street, Toronto ON), Room HS 100


This paper discusses some of the issues in defining health care outputs in terms of outcome and suggests some policy implications stemming from optimization of resources while holding outcomes constant.  Output of health care has often been specified as an institutional measure such as number of visits or admissions.  In fact, these are really intermediate-output measures in that they are inputs to the true output or outcome of providing medical care of which there are a number of candidate measures.   The model developed extends standard economic theories of production to respecify a production function for medical care services that expands on the work of Michael Grossman (1972) and others. It further satisfies a need set out by Marchildon and Di Matteo (2015) who state “…decision-makers now want to bend the health-care cost curve in a way that will not block access or damage quality.  Instead, they want permanent and persistent efficiencies, which will require that they…provide more appropriate but lower-cost services, substitute providers where possible, and rein in provider remuneration…”. The model set out is particularly timely as it is estimated that between 30% and 50% of health care expenditures are unnecessary to achieve current health care outcomes.



Eric Nauenberg is an associate professor in the Institute for Health Policy, Management and Evaluation and a senior health economist in the Ontario Ministry of Health and Long Term Care. His research work focuses on the impact of social capital on health care utilization and adherence as well as examining the relative effects of capital and labour on the growth of health care expenditures.