Healthcare expenditure efficiency and its determinants in Iran: a data envelopment analysis and Tobit regression (2000-2019)

Based on evidence of links between health expenditure and healthcare efficiency, this study aims to measure the performance of the health system in terms of macro-efficiency of healthcare expenditures in Iran over the period 2000-2019, and to investigate efficiency drivers. To this end, at the first stage an input oriented data envelopment analysis (DEA) under the assumption of variable return-to-scale is developed to measure health expenditure efficiency scores with the use of historical data during 20 years. We explore the efficiency of health expenditure by estimating the contribution of healthcare spending to life expectancy, infant survival rate, and cause of death. Next, we examine the link between the efficiency and its determinants through Tobit regression analysis. According to DEA results, it is revealed that the efficiency score of 20 years is 0.82 on average and the standard deviation is 0.11. Findings of the Tobit regression indicate per capita GDP and public health expenditure (% of GDP) have significant negative effect, while control of corruption, and population density are found to have a statistically significant and positive effect on the efficiency of healthcare expenditures in Iran (P<0.05). But education is not statistically significant in determining efficiency. Variation in the efficiency during the years suggests significant potential for improvement in population health status given the current level of health resources allocated to the healthcare. Also, positive impact of governance measures on efficiency indicates that management of the resources is important in the healthcare system, especially in the existence of corruption.