# **5. Health Facility Performance**

Facilities are as important to health care delivery as staffing. Hospitals tend to absorb a disproportionate amount of health care budgets. Despite the funding levels hospitals are frequently poorly managed, and little if any evidence on performance is available. Indeed hospitals and clinics are often “black boxes” due to the lack of information on performance and patient outcomes. Reliance on inputs to ascertain hospital efficiency and performance is not enough. Incentives for performance, lack of benchmarks and performance criteria coupled with little or no authority and accountability further exacerbate the problem (Box 1). As with individual providers, the basic management tools (management information systems, ability to discipline staff, flexibility in purchasing of inputs) are typically absent, undermining the ability of facilities to meet intended and desirable service quality and health outcomes (Figure 1).

Existing evidence suggest that finding alternative models that incorporate elements of the four components in Box 1 can help to raise performance. Little work has been undertaken on hospital performance and as a result evidence is highly limited and in some cases dated. A few studies have addressed the issue, such as Di Tella and Savedoff (2001) and Lewis, La Forgia, and Sulvetta (1991, 1996), both of which highlight some of the serious governance and corruption problems in public hospitals in Latin America. La Forgia and Couttolenc (2008) and McKee and Healy (2002) discuss some of the key accountability issues in hospital performance.

The extent of absenteeism, overpayment for basic supplies, poor resource use, and outright theft are detailed for selected countries and hospitals in Di Tella and Savedoff (2001) and Lewis, La Forgia, and Sulvetta (1991, 1996). In a Dominican hospital physicians only complied with 12 percent of their contracted time, interns were virtually unsupervised in the outpatient department, and the hospital budget was more than 50 percent higher than costs (based on actual expenditures). In seven countries, hospital data and focus groups summarized the lack of accountability health workers faced for absenteeism, petty theft, and large variations in prices paid for identical goods across national hospitals (Di Tella and Savedoff 2001). In all countries, the incentives faced by and limited authority of managers undermined the ability to improve quality and efficiency of hospital care, which together compromised performance. Evidence was pieced together from surveys and available administrative data and provides an incomplete but disturbing picture of hospital operations.

Limited incentives, restricted authority, lack of effective management information systems (MIS), ineffective payment arrangements, and managerial challenges combine to undermine health care delivery at the hospital level in many countries. In addition, the complexity of hospitals makes efficiency and performance hard to both measure and track. Since hospitals are usually either public, or publicly financed, political interference further complicates the situation. However, as the centers of health care delivery and clinical excellence, hospitals are central to raising overall health care performance.

## **Payments systems in health**

How hospitals and clinics are paid offers a potentially powerful incentive for providers to improve targeting, quality, and efficiency of health care delivery. This section 43