Technical efficiency in primary health care: does quality matter?

The accuracy required in the measurement of output is an issue that has as yet still not been satisfactorily addressed in empirical research on efficiency in primary health care. We exploit information retrieved from a newly constructed database (APEX06) for the Spanish region of Extremadura. The richness of our dataset allows us to consider original synthetic measures of output that take into account both the quantity and the quality of services provided by 85 primary care centers (PCCs) in 2006. We provide evidence that neglecting the issue of properly accounting for the quality of health services can lead to misleading results. Our main finding is that adjusting output for quality has a three-fold effect on efficiency analysis. Firstly, inefficiency explains relatively more of the deviation from potential output. Secondly, the average technical efficiency in the sector is lower, while its dispersion among PCCs is significantly higher. Thirdly, the efficiency ranking of the PCCs is affected.