Health Care Sector Efficiency: Measuring and …...Health at a Glance and Health Data Health Care...

Health Care Sector Efficiency:

Measuring and improving it

Christophe André

OECD, Economics Department

Institute of Health Economics – Alberta, Canada

Becoming the Best: Building Sustainable Health Systems

High Performing Health Systems

Edmonton, April 15th, 2011

Health at a Glance and Health Data

Health Care Systems: Efficiency and Policy Settings

OECD Economic surveys: Canada, 2010

Improving Value in Health Care – Measuring quality

Value for Money in Health Spending

Obesity and the Economics of Prevention: Fit not Fat

Websites:

Health

The Economics of Health

The OECD’s work on healthSelected publications and weblinks

http://www.oecd.org/topic/0,3699,en_2649_37407_1_1_1_1_37407,00.html

http://www.oecd.org/topic/0,3699,en_2649_34587_1_1_1_1_37407,00.html

Outline of the presentation

1. Measuring health care outcomes…

2. …and inputs

3. Deriving efficiency indicators

4. Reaping efficiency gains: the impact

on public spending

5. Performance and institutions

A positive link between health care spending

and outcomes but with country differences

aus

aut

bel

can

cze

dnk

fin

fra

deu

grc

hun

isl

irl

ita

jpn

kor

lux

mex

nld

nzl nor

pol

prt

svk

espswe

che

tur

gbr

usa

72

74

76

78

80

82

84

0 1000 2000 3000 4000 5000 6000 7000 8000

Total expenditure on health per capita, US $ PPP

Life expectancy at birth, years

Source: OECD Health Data 2010.

1. Measuring health care outcomes

Life expectancy (raw and adjusted for morbidity and

disabilities), specific mortality indicators (infant,

premature and amenable mortality)

Volume of health care consumption

Quality of care (avoidable hospital admissions and

in-hospital fatality rates)

Life expectancy at birth

Source: Health at a Glance 2009, OECD Indicators.

Japan

Switzerland

Australia

Italy

Iceland

Spain

France

Sweden

Canada

Norway

New Zealand

Netherlands

Austria

Germany

Belgium

Ireland

Finland

United Kingdom

Greece

Luxembourg

Korea

Portugal

OECD

Denmark

United States

Czech Republic

Poland

Mexico

Slovak Republic

Hungary

Turkey

82.6

81.9

81.4

81.4

81.2

81.0

81.0

81.0

80.7

80.6

80.2

80.2

80.1

80.0

79.8

79.7

79.5

79.5

79.5

79.4

79.4

79.1

79.1

78.4

78.1

77.0

75.4

75.0

74.3

73.3

73.2

405060708090

2007 1960

Years

Life expectancy at 65, women


Japan

France

Switzerland

Spain

Italy

Australia

Canada

Finland

Belgium

Norway

Austria

Germany

New Zealand

Sweden

Iceland

Korea

Netherlands

United States

Luxembourg

OECD

Portugal

United Kingdom

Ireland

Greece

Denmark

Poland

Czech Republic

Mexico

Hungary

Slovak Republic

Turkey

23.6

22.3

22.2

22.0

21.8

21.6

21.4

21.3

21.0

20.8

20.8

20.7

20.7

20.7

20.6

20.5

20.5

20.3

20.3

20.2

20.2

20.1

20.1

19.6

19.2

18.9

18.5

18.2

17.3

17.1

15.8

510152025

2007 1970

Years

Premature mortality, adjusted for transport accidents,

suicides and assaults

Source: OECD Health Data.

0

1000

2000

3000

4000

5000

6000Years of life lost per 100 000 population < 70, 2005

Amenable mortality

Source : Gay et al. (2011), "Mortality Amenable to Health Care in 31 OECD Countries: Estimates and Methodlogical Issues", OECD Health Working Paper, No. 55.

All causes, 2007 or latest year available

0 50 100 150 200 250

Estonia

Hungary

Slovak Republic

Poland

Mexico

Czech Republic

Portugal

United States

Chile

OECD

Slovenia

Denmark

Korea

United Kingdom

New Zealand

Ireland

Germany

Israel*

Greece

Finland

Luxembourg

Canada

Spain

Norway

Austria

Australia

Netherlands

Sweden

Japan

Italy

Iceland

France

Age-standardised rates per 100 000 population

Correlations between outcome measures(level and rank)

LE at birth LE at 65

Total Female

Life expectancy at birth, total 1.00 0.94 ** -0.93 ** 0.96 ** -0.96 **

Life expectancy at 65, female 0.89 ** 1.00 -0.77 ** 0.91 ** -0.86 **

Adjusted PYLL, total -0.82 ** -0.64 ** 1.00 -0.90 ** 0.91 **

Health-adjusted life expectancy at birth 0.95 ** 0.85 ** -0.84 ** 1.00 -0.89 **

Amenable mortality -0.92 ** -0.82 ** 0.85 ** -0.93 ** 1.00

Amenable

mortality

Health-

adjusted LE

Adjusted

PYLL

Source: Joumard , André & Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department Working Paper, No. 769.

Obesity rates


0

5

10

15

20

25

30

35

Self-reported Measured

% of total population

Volume of care

Hospital discharges


278 274

227

203194 191 190 189

188174 172 170 166 166 165 162 158 156

139 138 135 132126 126

109 108 107 106 105

84

55

0

50

100

150

200

250

300Per 1 000 population, 2007

Volume of care

Physician consultations


Japan

Czech Republic

Korea

Slovak Republic

Hungary

Spain

Belgium

Denmark

Germany

Italy

OECD

Poland

Austria

Iceland

Australia

France

Luxembourg

Canada

Netherlands

Turkey

United Kingdom

New Zealand

Finland

Portugal

Switzerland

United States

Sweden

Mexico

13.6

12.6

11.8

11.2

10.8

8.1

7.6

7.5

7.5

7.0

6.8

6.8

6.7

6.5

6.3

6.3

6.1

5.8

5.7

5.6

5.0

4.7

4.2

4.1

4.0

3.8

2.8

2.5

051015

Annual consultations per capita, 2007

Quality of care

Asthma avoidable hospital admissions


United States

Korea

Finland

United Kingdom

New Zealand

Poland

Japan

Austria

Ireland

Belgium

OECD

Spain

France

Denmark

Norway

Iceland

Switzerland

Netherlands

Sweden

Germany

Canada

Italy

120

97

92

75

73

62

58

54

52

52

51

44

43

43

42

34

32

26

25

21

18

17

020406080100120140160

Age-sex standardised admission rates per 100 000 population aged 15 and over, 2007

Quality of care - Congestive heart failure

avoidable hospital admission


Poland

United States

Germany

Austria

Italy

Finland

Sweden

France

OECD

Spain

New Zealand

Iceland

Ireland

Norway

Portugal

Netherlands

Belgium

Denmark

Switzerland

Canada

Japan

United Kingdom

Korea

474

441

352

331

308

306

289

276

234

234

206

202

192

188

176

171

169

165

155

146

134

117

110

0200400600

Age-sex standardised admission rates per 100 000 population aged 15 and over, 2007

Quality of care

Ischemic stroke


In-hospital case-fatality rates within 30 days after admission

2007

2.3

2.4

3.1

3.2

3.3

3.7

3.7

3.8

3.9

4.2

5.0

5.6

5.9

6.2

6.3

6.5

6.6

7.5

7.6

9.0

0 5 10

Iceland

Korea

Denmark

Finland

Norway

Italy

Austria

Germany

Sweden

United States

OECD

Luxembourg

Netherlands

Czech Republic

New Zealand

Spain

Ireland

Slovak Republic

Canada

United Kingdom

Age-sex standardised rates per 100 patients

2. Measuring health care inputs

Spending on health care

Number of physicians

Remuneration and prices

Health care spending2008


0

1000

2000

3000

4000

5000

6000

7000

8000

Public expenditure Private expenditure

Spending per capita, US $ PPP

Health care spending (% of GDP)2008


0

2

4

6

8

10

12

14

16

Public expenditure Private expenditure% GDP

Practising physiciansper 1000 population, 2007


Greece

Belgium

Netherlands

Norway

Switzerland

Austria

Iceland

Italy

Spain

Sweden

Czech Republic

Portugal

Germany

France

Denmark

OECD

Slovak Republic

Ireland

Finland

Luxembourg

Australia

Hungary

United Kingdom

United States

New Zealand

Poland

Canada

Japan

Mexico

Korea

Turkey

5.4

4.0

3.9

3.9

3.9

3.8

3.7

3.7

3.7

3.6

3.6

3.5

3.5

3.4

3.2

3.1

3.1

3.0

3.0

2.9

2.8

2.8

2.5

2.4

2.3

2.2

2.2

2.1

2.0

1.7

1.5

0246

Remuneration of general practitioners (GPs)2006 (2003 for the US)


Self-employed Salaried

0

20

40

60

80

100

120

140

160

180US $ PPP, thousands

Remuneration of specialists2006 (2003 for the US)


Self-employed Salaried

0

50

100

150

200

250

300

350US $ PPP, thousands

Comparative price levels for hospital servicesAverage of countries in the sample = 100

Source: F. Koechlin, L. Lorenzoni, P. Schreyer, Comparing Price Levels of Hospital Services Across Countries –

Results of pilot study, OECD Health Working Paper No. 53 (2010).

163

140

123 121114 113

98

85

6259 57

90

120

104

112

121

101

118

83

103

7973

142

95

115

99

113

118

108

69

82 81 81

0

20

40

60

80

100

120

140

160

180

Price levels for inpatient hospital services

Price levels for GDP

Per capita GDP level

Health care prices and volumes


-2

-1

0

1

2

3

4Spending per capita

Doctors

Nurses

Students

MRIs

Scanners Hospital beds

Rem. nurses

Rem. GPs

Rem. spec.

HC prices

Canada United States OECD average

3. Deriving efficiency indicators

Identify health status determinants

Implement 2 methods (panel regressions and

DEA) and various robustness checks

Complement the overall efficiency index with

other performance indicators

Health care resources

Lifestyle factors: diet, alcohol & tobacco

consumption

Socio-economic environment: income and

education

Pollution

Health care status determinants

Panel regressions – Model specification

(log form)

itHCR

iit

itDIET

itDRINK

itSMOK

ititGDP

itEDU

itAIRPOL

Panel regressions

Contribution of main explanatory variables

to cross-country differences in life expectancy

Determinants

Spending Education Tobacco Alcohol Diet Pollution GDP

Country-

specific

effect

United States -0.5 2.9 0.5 0.0 0.0 0.0 -0.6 0.6 -4.0

Germany 0.6 0.8 0.4 -0.1 -0.1 0.0 0.5 0.1 -1.0

France 1.3 0.9 -0.2 0.0 -0.3 0.0 0.4 0.2 0.4

United Kingdom 0.5 -0.1 0.4 0.1 -0.2 0.0 0.1 0.2 0.0

Canada 1.8 0.9 0.4 0.1 0.1 0.0 -0.8 0.3 0.9

Czech Republic -2.7 -1.8 0.5 -0.1 -0.3 -0.1 0.0 -0.6 -0.3

Korea -0.6 -2.4 0.1 0.0 0.0 0.1 0.3 -0.4 1.7

Life

expectancy

at birth

Source: Joumard , André, Nicq & Chatal (2008), "Health Status Determinants: Lifestyle, Environment, Health Care Resources and Efficiency ",

OECD Economics Department Working Paper, No. 627.

Panel regressions

Years of life not explained by the model

With health care resources measured in monetary terms

-5

-4

-3

-2

-1

0

1

2

3

Source: Joumard , André, Nicq & Chatal (2008), "Health Status Determinants: Lifestyle, Environment, Health Care Resources and Efficiency ", OECD

Economics Department Working Paper, No. 627.

DEA – Defining the efficiency frontier and

potential efficiency gains

70

72

74

76

78

80

82

84

0 1000 2000 3000 4000 5000 6000

Efficiency frontier

Life expectancy at birth (years)

Total health care spending per capitaO

utp

ut i

nef

fici

ency

Input inefficiency

0

10

20

30

40

50

60

0

1

2

3

4

5

6

Life expectancy at birth Life expectancy at 65 Amenable mortality (right scale)

DEA – Results and sensitivity analysis(for different outcomes)

Source: Joumard , André & Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department

Working Paper, No. 769.

Potential gains in life expectancy, years Potential gains in amenable mortality, %

DEA – Results and sensitivity analysis(for different inputs)

0

1

2

3

4

5

6

7Expenditure, ENV Health professionals, ENV Expenditure, ESCS, Nox

Expenditure, ESCS, Smoking Expenditure, ESCS, Alcohol

Potential gains in life expectancy, years

Source: Joumard , André & Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department Working Paper,

No. 769.

Comparing efficiency indicators

derived from panel regressions and DEA

Panel regression (years)

DEA (years)

aus

aut

can

cze

dnk

finfra

deu

grc

hun

isl

irl

kor

nld

nzl

nor

polswe

che tur

gbr

usa

0

1

2

3

4

5

6

7

0 1 2 3 4 5 6 7DEA (years)

Panel regression (years)

Efficiency: DEA efficiency score

and other performance measures


-3

-2

-1

0

1

2DEA score

Equity

All, in-patient care

Colorectal cancer

Lung cancer

Breast cancer

AMI

Femur fracture

Occupancy

TurnoverCataractCons./doctor

Adm. costs

DTP

Measles

Influenza

Asthma

Bronchitis

Heart failure

AMI

Stroke

Canada OECD average Group 2A

verage

len

gth o

f stay

Avo

idab

le a

dm

issi

ons

Vac

cin

atio

ns

Fata

lity

ra

tes

Group 2: Australia, Belgium, Canada, France

Efficiency: a closer look at

administrative costs


0

2

4

6

8

10

12

Per cent of total health care spending

4. Reaping efficiency gains: the impact

on public spending

Main assumptions:

• Health outcomes improve as they did in the past

• Two scenarios on the spending side are compared:

1. No reform scenario – spending increases as it did in

the past

2. Reform scenario – efficiency gains are exploited and

finance all or part of the improvement in health

status

In most countries, potential savings in public spending

are large

Exploiting efficiency gains would allow to

improve health outcomes further

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Canada France United Kingdom United States

1997-2007 Potential gains in 2007 (from DEA)

Gains in life expectancy, years

Exploiting efficiency gains would help

to contain future spending

45

27.5

61.5

43.1

5.510.7

0.0 0.0

-2.5

-1.3

-3.7

-2.7

-5

-4

-3

-2

-1

0

1

2

3

4

5

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

70

Canada France United Kingdom United States

1997-2007 2007-2017 Saving in public spending

% increase in per capita spending Saving, % 2017 GDP

Potential savings in public spending

Source: OECD Health Data 2009; OECD calculations.

0

1

2

3

4

5

6% 2017 GDP

A new set of OECD indicators on health care

policies and institutions (see Health Care

Systems: Efficiency and Policy Settings)

Cluster analysis to identify health care models

The bad news is: there is no ideal system…

The good news is… there is no ideal system ! …

… No « big bang » reform is required to improve

performance. Incremental reform can yield large

benefits

5. Performance and institutions

Is there an ideal health system ?

Characterising health care systems:

country groups

Source: Joumard, André & Nicq (2010), "Health Care Systems: Efficiency and Institutions " , OECD Economics Department

Working Paper. No. 769.

Linking efficiency with policy settingsNo health care system clearly outperforms the others

Source: Joumard, André & Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department

Working Paper, No. 769.

Indicators of health care spending efficiency can be

built and are relatively robust

The efficiency indicators can be complemented by

indicators of the quality of care and other

performance indicators

There is a large potential for efficiency gains in many

OECD countries

No health care model clearly outperforms others

Incremental reform is the way forward

Conclusions

Thank you !

Health Care Sector Efficiency: Measuring and …...Health at a Glance and Health Data Health Care...

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