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Health Care Sector Efficiency:Measuring and improving it
Christophe AndréOECD, Economics Department
Institute of Health Economics – Alberta, CanadaBecoming 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
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 spendingand outcomes but with country differences
aus
aut
bel
can
cze
dnk
fin
fra
deugrc
hun
isl
irl
ita
jpn
kor
lux
mex
nld
nzl nor
pol
prt
svk
esp swe
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.
JapanSwitzerlandAustraliaItalyIcelandSpainFranceSwedenCanadaNorwayNew ZealandNetherlandsAustriaGermanyBelgiumIrelandFinlandUnited KingdomGreeceLuxembourgKoreaPortugalOECDDenmarkUnited StatesCzech RepublicPolandMexicoSlovak RepublicHungaryTurkey
82.681.981.481.481.281.081.081.080.780.680.280.280.180.079.879.779.579.579.579.479.479.179.178.478.177.0
75.475.074.373.373.2
405060708090
2007 1960
Years
Life expectancy at 65, women
Source: Health at a Glance 2009, OECD Indicators.
JapanFranceSwitzerlandSpainItalyAustraliaCanadaFinlandBelgiumNorwayAustriaGermanyNew ZealandSwedenIcelandKoreaNetherlandsUnited StatesLuxembourgOECDPortugalUnited KingdomIrelandGreeceDenmarkPolandCzech RepublicMexicoHungarySlovak RepublicTurkey
23.622.322.222.021.821.621.421.321.020.820.820.720.720.720.620.520.520.320.320.220.220.120.1
19.619.218.918.518.2
17.317.1
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
EstoniaHungary
Slovak RepublicPolandMexico
Czech RepublicPortugal
United StatesChile
OECDSloveniaDenmark
KoreaUnited Kingdom
New ZealandIreland
GermanyIsrael*
GreeceFinland
LuxembourgCanada
SpainNorwayAustria
AustraliaNetherlands
SwedenJapan
ItalyIcelandFrance
Age-standardised rates per 100 000 population
Correlations between outcome measures(level and rank)
LE at birth LE at 65Total 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
Source: OECD Health Data.
0
5
10
15
20
25
30
35
Self-reported Measured
% of total population
Volume of care Hospital discharges
Source: OECD Health Data.
278 274
227
203194 191 190 189
188174 172 170 166 166 165 162 158 156
139 138 135 132 126 126
109 108 107 106 105
84
55
0
50
100
150
200
250
300Per 1 000 population, 2007
Volume of care Physician consultations
Source: OECD Health Data.
JapanCzech RepublicKoreaSlovak RepublicHungarySpainBelgiumDenmarkGermanyItalyOECDPolandAustriaIcelandAustraliaFranceLuxembourgCanadaNetherlandsTurkeyUnited KingdomNew ZealandFinlandPortugalSwitzerlandUnited StatesSwedenMexico
13.612.6
11.811.2
10.88.1
7.67.57.5
7.06.86.86.76.56.36.36.15.85.75.6
5.04.7
4.24.14.03.8
2.82.5
051015
Annual consultations per capita, 2007
Quality of careAsthma avoidable hospital admissions
Source: OECD Health Data.
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
Source: OECD Health Data.
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
Source: OECD Health Data.
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
Source: OECD Health Data 2010.
0
1000
2000
3000
4000
5000
6000
7000
8000
Public expenditure Private expenditureSpending per capita, US $ PPP
Health care spending (% of GDP)2008
Source: OECD Health Data 2010.
0
2
4
6
8
10
12
14
16
Public expenditure Private expenditure% GDP
Practising physiciansper 1000 population, 2007
Source: Health at a Glance 2009, OECD Indicators.
GreeceBelgiumNetherlandsNorwaySwitzerlandAustriaIcelandItalySpainSwedenCzech RepublicPortugalGermanyFranceDenmarkOECDSlovak RepublicIrelandFinlandLuxembourgAustraliaHungaryUnited KingdomUnited StatesNew ZealandPolandCanadaJapanMexicoKoreaTurkey
5.44.03.93.93.93.83.73.73.73.63.63.53.5
3.43.23.13.13.03.02.92.82.8
2.52.42.32.22.22.1
2.01.7
1.5
0246
Remuneration of general practitioners (GPs)2006 (2003 for the US)
Source: OECD Health Data.
Self-employed Salaried
0
20
40
60
80
100
120
140
160
180US $ PPP, thousands
Remuneration of specialists2006 (2003 for the US)
Source: OECD Health Data.
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
62 59 57
90
120
104112
121
101
118
83
103
7973
142
95
115
99
113
118108
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
Source: OECD Health Data.
-2-101234
Spending 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
ititGDPitEDUitAIRPOL
Panel regressions Contribution of main explanatory variables
to cross-country differences in life expectancy
Determinants
Spending Education Tobacco Alcohol Diet Pollution GDPCountry-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 regressionsYears 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
utpu
t ine
ffici
ency
Input inefficiency
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)
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
Source: OECD Health Data.
-3
-2
-1
0
1
2DEA score
EquityAll, in-patient care
Colorectal cancer
Lung cancer
Breast cancer
AMI
Femur fracture
Occupancy
TurnoverCataractCons./doctor
Adm. costs
DTP
Measles
Influenza
Asthma
Bronchitis
Heart failure
AMIStroke
Canada OECD average Group 2Average length of stay
Avoi
dabl
e ad
miss
ions
Vacc
inati
ons
Fata
lity
rate
s
Group 2: Australia, Belgium, Canada, France
Efficiency: a closer look at administrative costs
Source: OECD Health Data.
0
2
4
6
8
10
12Per 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
Exploiting efficiency gains would help to contain future spending
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 institutionsIs 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 !