Cost Productivity of Healthcare Systems in OIC’s Member Countries: an Application of Cost Malmquist Total Productivity Index

Abstract

Strengthening healthcare system increases the productivity of healthcare spending. To evaluate changes in cost productivity over a five year period (2011- 2015) in 55 OIC’s member states. The cost Malmquist productivity index and bootstrap truncated regression are applied to estimate the dynamics of the cost productivity and its determinants in the healthcare system of OIC’s member states. Life expectancy and under 5 child survival rate are used as outputs while doctors, nurses, mid wives and beds per thousand population are used as inputs. Public health expenditure is used as input price for measuring allocative efficiency change. The results of the study indicate that the cost productivity increases by 7.9% and the classical technical productivity grows by 8.9%. The increase in the cost productivity is mainly driven by an increase in allocative efficiency and technological change. All the determinants except population growth rate of cost productivity are found significant. Literacy rate and Per Capita GDP have come up the main driver of cost productivity growth. The study concludes that the impact of population growth on the overall shifts in the health production frontier is not significant.