Introductionignificant increases in health care costs have been burdening national economies for a number of years. This problem is of particular concern to industrialized countries where support for vital services, such as, national security and education are gaining more public demand. In 1984, OECD countries had a health care per capita expenditure mean of $870.00 (with purchasing power parity adjustment); this figure rose to $1,983.00 in 2000. When compared with the OECD means, the United States has maintained two times its per capita expenditure in the past 20 years. While controlling costs is the priority, both developed and developing nations are trying to improve access to and quality of health care services for their citizens.The majority of research in the area of efficiency measurement has focused on the firm/organizational level. In the health care sector, as increasingly more resources are poured in, it is equally important to know the relative efficiency of the entire (macro) system. However, an important aspect of macro-level analysis is to have input and output measures that are consistent, definable and uniform across different systems.Among the various methods of efficiency assessment, researchers in the field of business management have frequently used Data Envelopment Analysis (DEA). The robustness of DEA has been the main reason for its wide popularity. Although there are published studies related to a comparative analysis of health care systems, none, at the time of writing this paper, have applied the DEA method in assessing macro-level efficiencies.The objective of this paper is to apply the DEA technique to the measurement of health care efficiencies of G12 countries and discuss policy implications of such findings. The organization of the paper is as follows: First, a review of literature is provided. Next, the DEA methodology is elaborated upon and is followed by empirical testing and analysis. The last part of the paper will be devoted to the summary and conclusions.
Literature ReviewIn a comparative analysis of health care systems, we have found a number of fairly recent studies. In a five nation (New Zealand, UK, US, Canada, and Australia) study, Blendon et. al. (2003) finds that a significant number of citizens are dissatisfied with their health care system. With a focus on OECD countries, Anell and Willis (2000) suggest that instead of expenditure measures, using a resource profile is a more desirable alternative for an international comparison of health care systems. In another OECD-based study, Anderson, et. al. (2003) suggest S
