To measure the efficacy of any production unit we must have a given, well defined objective function which is absent in most of the cases. Hence to measure the efficacy is almost impossible. But we can measure the relative efficiency of hospitals (any economic production unit) by using DEA, SFA etc. Because in absence of well defined objective function , we can measure relative efficiency easily and effectively.
There are several methods which can be used to understand efficacy and efficiency in health.
Applying the service productivity method in the field of health we can talk about different values (qualities) of health as experienced health, quality of life, accessibility, trust, communication, avoidable suffering and avoidable deaths as outcomes. These outcomes should be described and measured. Of course the used resources have to be measured and related to the outcomes. (Ref. Nordgren 2009, Value creation in health care services – developing service productivity-Experiences from Sweden, International Journal of Public Sector Management).
An example of health economic analysis is done in "The EuroHOPE project", which compares quality and costs of hospital care in Finland, Norway, Sweden, the Netherlands, Scotland, Hungary and some provinces in Italy. In the project is analysed resource use and treatment results for care for myocardial infarction, stroke, hip fracture, very low birth weight infants and some forms of breast cancer. The project aims at comparing costs and outcomes for a set of diseases by linking data sources from different health care systems. Another aim is to develop methods and models for benchmarking of hospital care between and within countries.
Ref. Häkkinen et al, Health Economics, Vol. 24, supplement 2, december 2015.
DEA can be used for measuring the relative efficiency . But the efficacy is impossible to measure in this context because We don't have a concrete theoretical objective which We can target and attain the same@ MD Shahidul Islam