Bernie Goldie

Social Science & Medicine reports on key new method

A general method has just been published by Professor Simon Eckermann (Australian Health Services Research Institute, UOW) and Professor Tim Coelli (University of Queensland) in Social Science & Medicine enabling quality of care variables (such as mortality, morbidity and readmission rates in hospitals) to be incorporated consistent with maximising net benefit in efficiency measures and associated benchmarking and peer identification. [See Social Science & Medicine article here:]

The five key highlights from their paper ‘Including quality attributes in efficiency measures consistent with net benefit: Creating incentives for evidence based medicine in practice’ in Social Science & Medicine are: 

 1. Include quality attributes in efficiency measures consistent with maximising net benefit

 2. Policy rich decomposition of net benefit efficiency into technical and allocative efficiency measures

 3. Estimation of shadow prices for quality in the absence of prices for services, such as public hospital admissions

 4. Coverage and comparability conditions provide a robust framework to prevent cost shifting and cream skimming incentives

 5. Consistently links efficiency and health technology assessment to create incentives for evidence based medicine in practice

The advantages of the method arise from combining the appropriate objective with relative efficiency measures. Applied to health care, this provides a bridge between health technology assessment and efficiency comparison in practice, with efficiency measures which create incentives for net benefit maximising evidence based medicine in practice.

More generally the method allows efficiency measures, peer identification or other relative performance comparison processes such as benchmarking to create appropriate incentives for quality wherever maximising net benefit is an appropriate objective (e.g. across health sectors; aged care; government services; education; industries with environmental impacts etc.). Importantly, Professor Eckermann said regardless of where applied, the method creates accountability and incentives for service quality consistent with maximising net benefit, rather than cost minimising quality and associated perverse incentives for cost-shifting and cream skimming incentives that result from ignoring quality.

Professor Eckermann advised the method would be taught by the authors as part of the three-day course: ‘Health Economics from Theory to Practice: optimally informing related decision of research, reimbursement and regulation’. It will be run by UOW next year in Adelaide from 3-5 April. For more information click here.

To podcast Professor Simon Eckermann’s interview with Norman Swan on ABC Radio National click here. For more information on the interview click here.


  • Professor Simon Eckermann from UOW’s Australian Health Services Research Institute