Do healthcare financing systems influence hospital efficiency? A metafrontier approach for the case of Mexico

The objective of this article is to discuss the impact of healthcare financing systems on the efficiency of Mexican hospitals. The Mexican healthcare system is undergoing a process of transformation to establish conditions for allocating limited health resources in order to achieve efficiency and transparency; in this line, there is a concern about the implications of different funding options. In terms of financing arrangements, the Mexican health system is divided into three categories (one private and two public). In the framework of New Public Management theory, non-parametric metafrontier methods are used to estimate differences in efficiency of hospitals under different financing schemes, and in relation to the potential technology available in the healthcare system. Empirical evidence suggests that: 1) an out-of-pocket funding system, on average, incentivizes more efficient behavior; and 2) public funding seems to be the best option for complex and high-technology hospitals, and capitation appears to be the most appropriate way of negotiating their funding.