Jornadas de economia de la
salud
June 2010
Valencia




Measuring health
services (in the
national accounts)
Paul Schreyer...
Background
• Much effort spent on measuring the value of
  GDP at current prices

• Even more important: volumes.

• Diffi...
Background
• Health services are a prime example:
  – Rapid technological change
  – Provision often by non-market supplie...
Background
• Recent work:
  – Eurostat (2001) & EU Regulation
  – Atkinson report (2005) and work by
    UKCMGA
  – United...
This presentation
• A few concepts
• Capturing health services and quality
  change
• Conclusions
Terminology
• Inputs
• Outputs
  – Processes without explicit quality adjustment
  – Processes with explicit quality adjus...
Inputs                        Outputs                               Outcomes

                   Process without       Pro...
Terminology
→National accounts should strive at
 measuring outputs
  →in the form of quality-adjusted processes
  →or as t...
Non-market production
• Nothing special in terms of the basic
  service provided, but mode of provision is
  different
• I...
From inputs to outputs
• Efforts to capture volume change of
  outputs, not of inputs
• What exactly is output of health i...
• The long (& still incomplete) answer is
  here:
  OECD (2010); Towards Measuring the
  Volume Output of Education and He...
Completed treatment
• Pathway that an individual takes through
  heterogeneous institutions in the health
  industry in or...
Measuring treatments
• Required to construct disease-based
  output measures:
  – number of treatments by type of disease ...
Denmark: Input price index and output price index
          for general hospital services
             based on ~ 800 DRGs...
Quality change
• Via stratification (implicit quality
  adjustment)
• Explicit quality adjustment
• Capturing quality by m...
Capturing quality change via
         stratification (1)
• Basic idea: matching products: services are
  stratified such t...
Capturing quality change via
            stratification (2)
   • 2 treatments, traditional and laser surgery
          Sam...
Capturing quality change via
         stratification (3)
• Measured output declines! →Counter-intuitive
• Problem: 2 medic...
Capturing quality change via
        stratification (4)
• In a perfect market, the price of the
  traditional treatment wo...
Capturing quality change via
        stratification (5)
• A more sophisticated method would be to keep
  both treatments i...
Capturing quality change via
         stratification (6)
• Note: even if we do not explicitly quality-adjust products,
  t...
Capturing quality change via
      explicit adjustment
• If stratification is too granular, explicit
  quality adjustment ...
Capturing quality change via
measuring marginal contribution to
           outcome
• Example: QUALYs, DALYs
• Problems:
  ...
Conclusions (1)
• Output and outcome are different and should
  not be confused
• National accounts and productivity studi...
Conclusions (2)
• Problems of quality adjustment arise
  whether services are provided by market
  or non-market producers...
Conclusions (3)
• Measuring output for complex services is
  difficult
• But conclusion should not be that it is simply to...
Thank you for your attention!
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Paul schreyer

  1. 1. Jornadas de economia de la salud June 2010 Valencia Measuring health services (in the national accounts) Paul Schreyer, OECD
  2. 2. Background • Much effort spent on measuring the value of GDP at current prices • Even more important: volumes. • Difficult when – Products are complex with changing quality – There are no economically significant prices
  3. 3. Background • Health services are a prime example: – Rapid technological change – Provision often by non-market suppliers • So how are health services measured in the NA? • And should this be done differently?
  4. 4. Background • Recent work: – Eurostat (2001) & EU Regulation – Atkinson report (2005) and work by UKCMGA – United States: Triplett and Bosworth 2004, Abraham and Mackie 2006 – OECD: • Handbook 2010 • Data development: health PPPs – Stiglitz-Sen-Fitoussi Commission (September 2009)
  5. 5. This presentation • A few concepts • Capturing health services and quality change • Conclusions
  6. 6. Terminology • Inputs • Outputs – Processes without explicit quality adjustment – Processes with explicit quality adjustment • Outcomes – Direct outcomes – Indirect outcomes • Best explained by way of a graph
  7. 7. Inputs Outputs Outcomes Process without Process with Direct Indirect explicit quality explicit quality outcome outcome adjustment adjustment Example Example education: education: quality- Knowledge number of adjusted number and skills as pupils/pupil hours of pupils/pupil measured by Future real by level of hours by level of scores earnings, education education growth rate Labour, capital, of GDP, intermediate well- inputs Example health: rounded Example health: quality-adjusted citizens number of number of Health status etc. complete of population complete treatments by treatments by type type of disease of disease Inhereted skills, socio-economic Environmental factors background, etc. Hygene, lifestyle, infrastructure etc.
  8. 8. Terminology →National accounts should strive at measuring outputs →in the form of quality-adjusted processes →or as the marginal contribution to outcomes →Outcomes (as used here) is indicative of results of the health system as a whole →Although outcome ≠ output, they are not independent
  9. 9. Non-market production • Nothing special in terms of the basic service provided, but mode of provision is different • In particular: prices not economically significant • Traditional way of dealing with this: – Value of output = value of inputs (sum of costs) – Volume of output = volume of inputs – Problem: defines away productivity change
  10. 10. From inputs to outputs • Efforts to capture volume change of outputs, not of inputs • What exactly is output of health industry? • Target definition: • Health service = complete treatment of a disease or medical service to prevent a disease • But what exactly is a ‘complete treatment’? • And how to deal with quality change?
  11. 11. • The long (& still incomplete) answer is here: OECD (2010); Towards Measuring the Volume Output of Education and Health Services: A Handbook • The short answer in the slides to follow.
  12. 12. Completed treatment • Pathway that an individual takes through heterogeneous institutions in the health industry in order to receive full and final treatment for a disease or condition. • Not easily applicable, conceptually and empirically: – E.g., chronic diseases, data limitations • After reality check: treatment of one episode of disease by a particular institution • Main point: towards disease-based estimates
  13. 13. Measuring treatments • Required to construct disease-based output measures: – number of treatments by type of disease or – costs per treatment by type of disease • Administrative sources (e.g. DRGs) have significantly facilitated access to such information (Germany, Denmark, Australia, France,…) • Volume indices can then be constructed: • Weighted average of # of treatments • Weights: cost share of type of disease
  14. 14. Denmark: Input price index and output price index for general hospital services based on ~ 800 DRGs 120.0 115.0 110.0 105.0 Input based Output based 100.0 95.0 90.0 2000 2001 2002 2003 2004 2005
  15. 15. Quality change • Via stratification (implicit quality adjustment) • Explicit quality adjustment • Capturing quality by measuring marginal contribution to outcomes
  16. 16. Capturing quality change via stratification (1) • Basic idea: matching products: services are stratified such that only similar services are compared • Criterion for classification: similarity in effects on patients, and not similarity in how services are produced • Example: different treatments for the same disease (in a particular type of establishment) should be in one stratum, and not similar medical procedures for different diseases • Implies: most detailed stratification = not necessarily best choice with cost weights and imperfect markets
  17. 17. Capturing quality change via stratification (2) • 2 treatments, traditional and laser surgery Same effect on outcome Laser is cheaper Laser surgery diffuses progressively Traditional surgery Laser surgery Period 0 Period 1 Period 2 Period 0 Period 1 Period 2 Unit cost 100 100 100 - 90 90 Number of interventions 50 40 5 0 10 45 Total cost 5000 4000 500 0 900 4050 Laspeyres volume index period 1 to period 2: [sT(5/40)+sL(45/10)]-1=-7.1% where sT=82% and sL=18% are the period 1 cost shares
  18. 18. Capturing quality change via stratification (3) • Measured output declines! →Counter-intuitive • Problem: 2 medical procedures have been treated as 2 different services • Note also implicit assumption: – consumer valuation of the two ‘products’ is captured by the relative unit costs, – so if laser surgery is cheaper than traditional surgery, this method implicitly quality-adjusts downward the quantity of laser surgery when it is combined with traditional surgery.
  19. 19. Capturing quality change via stratification (4) • In a perfect market, the price of the traditional treatment would instantaneously adjust downward and/or traditional treatment would disappear • In practice and in a non-market context, this does not happen →2 treatments should be treated as the same product →no cost weighting, volume change = zero
  20. 20. Capturing quality change via stratification (5) • A more sophisticated method would be to keep both treatments in the same stratum but explicitly adjust one of the treatments • For example put a coefficient of 0.8 on the traditional treatment • Such adjustments would have to rely on medical effectiveness studies • There is some way to go before practical implementation • For more on this, see Triplett (2001): What’s different about health? Human repair and car repair in national accounts and in national health accounts
  21. 21. Capturing quality change via stratification (6) • Note: even if we do not explicitly quality-adjust products, the decision how to group them cannot be made without some reference to effects on outcome • Otherwise, no statement can be made about substitutability of services and how they should be classified • Nearly everything that has been said about quality adjustment via stratification applies also to market production • Only difference: price statisticians or national accountants who have to deal with it
  22. 22. Capturing quality change via explicit adjustment • If stratification is too granular, explicit quality adjustment may be needed • Basic problems: – Quality is multidimensional: how to aggregate across dimensions? (waiting times, risk of suboptimal treatment...) – How to aggregate change in quality variable(s) with change in quantity (process) variables?
  23. 23. Capturing quality change via measuring marginal contribution to outcome • Example: QUALYs, DALYs • Problems: – Making sure factors other than health care are controlled for; – Timing – lag between service and outcome – Putting monetary value on human lives • Very useful avenue of research but unlikely to be implemented in official statistics soon
  24. 24. Conclusions (1) • Output and outcome are different and should not be confused • National accounts and productivity studies of establishments need measures of output, not of outcome • But output and outcome are not independent • In the presence of quality change, all existing methods require some implicit or explicit information or reasoning about outcome. • Output or medical services should be based on treatment of disease unit of production
  25. 25. Conclusions (2) • Problems of quality adjustment arise whether services are provided by market or non-market producers. • A pragmatic approach will be called for to proceed with services measurement – no reason to approach every type of service with the same method for quality adjustment – methodologies should be robust and transparent
  26. 26. Conclusions (3) • Measuring output for complex services is difficult • But conclusion should not be that it is simply too difficult to do anything. • Visible progress in the area of health due to availability of administrative data • It may take a while before consensual and internationally comparable methods are agreed upon but active research and data development is vital to achieve this objective.
  27. 27. Thank you for your attention!

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