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We estimate the efficiency of health spending in 145 middle and high-income and the potential gains from improving efficiency for a range of health system outputs using Robust Data Envelopment Analysis for 2010-2014 and 2015-2019 and examine associations with health system characteristics. Focusing on Latin American and Caribbean countries, we find large variability in efficiency and overall substantial potential gains in the later period, despite improvements over time. Our results suggest that, for example, improving spending efficiency could increase life expectancy at birth by 3.5 years (4.6%), or slightly more than the 3.4-year improvement in average life expectancy in the region between 2000 and 2015. Similarly, improved efficiency could reduce neonatal mortality by 6.7 per 1,000 live births (62%), increase service coverage by 6 percentage points (8.7%), and reduce the rich-poor gap in birth attendance by 10 percentage points (12.6%). We find that governance quality is positively associated with efficiency. Overall, the findings indicate an urgent need to improve efficiency in the region and substantial scope for realizing the potential gains of such improvements.