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Background  Conceptual frameworks of fiscal space for health have traditionally considered health system efficiency improvements as a means to free up resources for the sector. However, there has been no comprehensive review of the evidence to confirm the relationship between efficiency and fiscal space.    Methods  We conducted a systematic review to synthesize evidence on whether efficiency gains increase fiscal space for health. We searched bibliographic databases for specific keywords – namely, fiscal space, efficiency and health – and identified 22 articles that examined links between efficiency gains and fiscal space for health. The articles, which encapsulated 28 case studies, were included in the analysis.    Results  The 28 case studies varied widely with regard to how efficiency was evaluated, the extent to which efficiency was explored, and how efficiency gains could be achieved. Half of the studies assessed both technical and allocative efficiency, and the other half assessed technical efficiency only. The indicators to examine potential inefficiencies varied substantially among studies. The most frequently cited inefficiencies stemmed from public financial management (budget implementation, budget allocation and strategic purchasing) and governance issues, even though these were characterized in various ways. The second most cited set of inefficiencies that caused health systems to function poorly were those related to health service delivery. Procurement and delivery of input factors was also mentioned in some studies as a source of inefficiency. Though most studies conceded that efficiency gains were a potential means to improve fiscal space for health, very few quantified the potential gains or explored practical mechanisms to translate efficiency gains into fiscal space for health.    Conclusions  While the conceptual link between efficiency gains and fiscal space for health may be assumed, there is no direct empirical evidence proving that efficiency gains translate into more resources for the health sector. Mechanisms to translate efficiency gains into fiscal space are barely explored in the fiscal space literature. Public financial management rules and related rules for reallocating funds within the sector need to be further examined to guide countries in the transformation of efficiency gains into more resources for health.

Improving fiscal space for health from the perspective of efficiency in low- and middle-income countries: What is the evidence?