Inefficiency in the South African public health sector contributes significantly to the country’s relatively poor health outcomes, yet it is poorly understood and overshadowed by health care financing and payment issues. This paper explores this situation from the perspective that the public health sector forms part of a complex adaptive system from which inefficiencies emerge endogenously. Leibenstein’s seminal work provides the basis for a conceptual framework that explores and describes management in the public health sector from an x-inefficiency perspective. Further research into x-inefficiency and its underlying causes may be useful to guide the design of appropriate health policies in the South African context. Unless reforms targeted at improving x-efficiency are prioritised, increased revenue allocation to the public health sector will have a sub-optimal impact on health outcomes.
Keywords: complex adaptive systems, human behaviour, rules and institutions