Efficiency in Resource Allocation

The purpose of the present paper is to outline a health planning framework for the achievement of allocative efficiency by the comparison of programs across the entire health sector. Implementation of the framework could form the basis for improved resource allocation. In Part 1 there is a discussion of allocative efficiency; its importance, the theoretical requirements for its achievement, and identification of aspects of current health funding arrangements which inhibit the achievement of allocative efficiency. In Part 2, the health planning framework is outlined and its relationship to the prerequisites for allocative efficiency is explained. Implementation of the framework involves several key conceptual challenges, some approaches to these are discussed. Finally, current work on application of the framework to non-insulin dependent diabetes mellitus (NIDDM), in which issues to do with implementation will be explored, is introduced.