How Technology Affects Allocative Efficiency

What drives technology? What makes something new and innovative? The answer to these questions and others like them revolves around efficiency. The efficiency with which a technological system produces an economic or other value-added output can vary dramatically across different technological systems.

Technological efficiency in the health centres industry can vary according to the input costs of producing that value-added output, i.e., labour, materials, technology, etc. For example, if an organization is able to purchase materials from suppliers at the lowest possible cost and make the best use of those materials, productivity is likely to increase. However, when the same inputs are purchased at the most expensive levels, productivity suffers because excess labour, materials and technology are necessary to make the same output at a higher level of overall costs. Such a case studies is shown in the performance of health centres with a low, medium and high technical efficiency score (based on data provided by an ISO 27001 certified data analysis tool).

The health centre inputs considered here are mainly land, labour and technology. Input costing methods are used to relate the prices of allocation factors across the various technological systems at the various locations. One example of such a data collection method is the Health Invoice Data Collection System (HIDC). According to this method, a health centre’s costs are measured on the basis of land, labour and technology utilization for production. This approach has the advantage of focusing on cost and quality management activities at the national level, as opposed to local or unit level.

The results show that there is substantial variation between health centres that fall into different regions or industries. Some of the inputs used in production processes are affected by the location of the manufacturing facility, while some are unaffected. For example, while labour costs in some areas may not be relatively high, they are relatively lower in other areas. The location of the facility itself however does not impact the efficiency of the production process or its eventual impact on the firm’s bottom line. Such variation in input costs across regions therefore cannot be viewed as resulting from regional differences.

Analysis of health centre inputs shows that there is a substantial effect of technology on the final efficiency scores. The first stage of the study finds that technology and activity affect efficiency through their effects on the efficiency of information systems. The next stage shows that technology, activity and information systems together have a powerful effect on the efficiency of the first stage. The third stage then links these three factors – the technology, activity and information systems – to the firm’s overall efficiency. Based on the results, it emerges that the combination of the three elements, the IT portfolio, the quality management framework and the firm’s competitive strategy can improve the efficiency of any operation.

Based on these results, the regression analysis model is formulated. As suggested by the regression analysis model, the first step towards encouraging health centres to become technologically efficient involves the creation of a relevant incentive programme. Based on the regression analysis results, it is found that incentives relating to the design of information systems, the maintenance of good machinery and the provision of good services are highly effective in encouraging technological developments. The second step in encouraging such efficiency improvements includes the creation of appropriate information policies and reforms. These reforms include the setting up of appropriate performance standards for medical centres, the encouragement of appropriate technology use and the creation of appropriate incentives programmes.

One important area that still remains to be addressed is how to attract new patients to health centres through information systems. In this respect, it is found that health care professionals have an effective way of dealing with this challenge. By creating incentives for doctors and other staff to use electronic patient records, doctors and other staff can ensure that they do not spend time creating inefficient procedures that will ultimately result in wasted resources. This also reduces the possibility of unnecessary inefficiency resulting from the failure to record certain procedures. Such methods include providing training opportunities, the provision of clinical expertise and the provision of necessary computers and communication equipment.

The introduction of technology in the health centres has helped to reduce the inefficiency associated with human interaction. This is because human error is greatly reduced when one is able to record procedures clearly and quickly using a computer. However, it is important to note that technology is only one of the many factors that contribute to the creation of allocative efficiency. Other important factors include maintaining information systems, creating appropriate incentives and ensuring that healthcare centres create information systems that are easy to use.