Performance indicators and performance assessment in the UK national health service: Implications for management and planning

Throughout the Western world policy makers are seeking to control the use of health care resources. Often the primary motive for these policies is to control or the total level of public expenditure on health care. One manifestation of such policies in the USA is the use of diagnostic related groups (DRGs), and this instrument is now being adopted in Europe (for example, in France as from January 1986). In Britain, as similar management tool is that of performance indicators, which are basically measures of input and activity. In this article it is argued that management responses to these measures may not lead to greater efficiency in resource utilization. Whilst the use of input and process measures to control resource allocation are better than no controls at all, the achievement of efficiency requires that such measures are supplemented with the assessment of outcomes and analyses of input-output relationships. Such supplementation, for example by using quality-adjusted life years (QALYs), is urgently required if policy makers are not to become disenchanted with the usefulness of existing performance indicators.