The healthcare expenditures around the world are claiming bigger and bigger share of a country GDP each year. However, the effectiveness of the healthcare system compared to the ever-rising healthcare expenditures is not clearly defined and compared. A generic model of cost-effectiveness index is developed for a hospital unit (department). The cost-effectiveness index (CEI) consists of the total operating costs (TOC) and total effect index (TEI). TEI consists of healthcare productivity index (HcPI), health status index (HSI), healthcare quality index (HcQI) and healthcare efficiency index (HcEI). All of the effect measures are in different dimensions, thus index number method was applied to convert the effect measures into non-dimensional numbers that can be summed or subtracted. The CEIs obtained are relative among a few different hospitals. The CEIs can be a performance assessment tool to compare the operation of different hospital, and subsequently act as a motivation tool to drive for improvement.
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