Value for money
Value for money: a performance framework judging results on economy, efficiency and effectiveness, the '3 Es', used where profit is not the objective, such as public services.
See it move
A municipal health clinic cuts its cost per consultation from a budgeted €40 to an actual €36, achieving economy. It also raises patients seen per staff hour from 6 to 7, an efficiency gain. Yet if its real goal was cutting flu hospitalisations by 10% and hospitalisations fall only 2%, the clinic has failed on effectiveness despite hitting its cost and output targets.
The formula
Variables
- Output achieved in the period (units)
- Input consumed in the period (input units)
The most directly computable of the '3 Es': how much output an organisation gets from each unit of input, such as patients seen per staff hour.
Check yourself
A public library service aims to keep its costs low, maximise the number of book loans processed per staff hour, and ultimately raise local reading rates. Last year it processed 4,800 loans using 800 staff hours. This year, staffing fell to 750 hours but loans processed rose to 5,250. Based on loans per staff hour, which of the '3 Es' has clearly improved, and by how much?