At a time when health care systems are undergoing reform, it is useful to review the causes of inefficiency in health care, along with potential solutions. Such solutions can affect suppliers (supply-side measures) or users of care (demand-side measures). This paper argues that to have an efficient health care system, supply-side measures must be implemented. Some examples of supply-side measures, with particular relevance to the Hong Kong situation, are discussed. By their nature, supply-side measures require government intervention. Only then, can allocative efficiency, as well as technical efficiency, be achieved. Once a health care system is operating efficiently, it is an easier task to determine whether the system requires more resources, either currently, or in the future.