Editorial: Efficiency, effectiveness, and productivity – widely used, but often misunderstood in healthcare

Abstract

According to the World Health Organization, healthcare is a system that consists of subsystems, organizes people, institutions and resources and delivers healthcare services to meet the health needs of target populations (Braithwaite et al., 2020). The three key elements of a system or subsystem are inputs, processes and outputs (Cusins, 1994). For instance, a hospital is a subsystem of a healthcare system consisting of inputs, processes and outputs. Input is the resources, such as human, capital, material, tools and information, required in an organization. Output is health services. The inputs are transformed by carrying out different activities and procedures to give output. These different activities and procedures are known as processes. Efficiency, effectiveness and productivity are key performance indicators (KPIs) widely used when discussing any healthcare system or subsystem (Evans et al., 2001). It is desirable that the healthcare system should be efficient, effective and productive (Street and Häkkinen, 2009). These three KPIs are related but have different concepts. An enormous amount of literature is available to define and differentiate these terms (Burches and Burches, 2020). However, it can be seen in the medical literature that they are used interchangeably (Lodge, 1991). For instance, Kao et al. (1995) explained, “Efficiency refers to the ratio of outputs and inputs, effectiveness refers to the extent to which outputs align with predetermined goals. Productivity refers to the sum of both efficiency and effectiveness.” Very clearly, the definition of productivity is flawed. The author of this paper tries to explain these terms using an illustrative diagram (Figure 1). Most of the explanations in this study are built upon two already-published research papers. They are: