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“Classify the following as either a measure of effectiveness, efficiency or economy according to the 3Es framework for an NHS hospital
…What was the average spend per bed over the period?”
Hello
Can you please help me understand how the above is a measure of efficiency (that is what the exam kit shows). I thought it was supposed to be economy because the money spent on beds for a hospital indicates how much have we spent on resources (the beds)I will really appreciate your explanation, thanks
The average spend per bed is not meaning how much they paid to buy each bed.
It is the total spent in the hospital divided by the number of beds (so the average spend per bed).
It is a measure of efficiency because the more efficiently they are performing, the less the average spend per bed will be.
Ok, but efficiency links inputs (resources) to output generated. So in this case, where is the output? (we are only comparing the money spent on resources here)
And wouldn’t the hospital have a lower cost per OUTPUT if it is performing more efficiently rather than a lower cost per input (the beds)?
I still did not understand how is it exactly a measure of efficiency, please help me understand the meaning of efficiency more clearly
Thank you
Have you watched my free lectures on this, because I give several examples of how we might choose to measure both efficiency and effectiveness (and use them to explain the difference between the two).
Yes. And you did not explain to me the first 2 questions I typed in my previous response. They are very specific, that is why I asked for an explanation from you (the lectures don’t give an explanation specific to my doubt)
They do clearly explain the concept, but the problem is applying them in the qn above
Looking forward to your explanation, thank you
Suppose they are spending $100,000 a year on the costs of running the hospital, and they have 200 beds in the hospital. That means that they are spending $500 a year on running costs for each bed.
If they could cut increase the number of beds to 250 without having to pay more than the $100,000 for their running costs, then they would only be spending $400 a year to deal with each bed. That would mean that they were using their resources more efficiently.
It is not a measure of economy because economy is looking to see that they are paying a fair price for their resources. E.g. checking that they cannot buy their beds for a lower price, checking that they cannot change their electricity provider so as to be paying a lower price for the electricity they are using.
If you want to think in sort of ‘formula’ terms, then the input is the total of their running costs and the output is the number of beds that they are managing to service using those running costs.
It is exactly the same principle as the examples I give in my lecture.
Oh, so there is a difference between when we are given the average spend for an item (a measure of efficiency-the total budget being the resource in this case and the specific item for which the budget is utilised being the output) and the cost per resource bought (a measure of economy)? Please correct me if I am wrong.
And thank you very much for such a detailed and clear explanation. I appreciate them a lot.
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