Eva Orosz OECD Health Division Joint OECD/ONS/Government of Norway Workshop

1. New approaches to measuring non-market output in national accounts: Implications for OECD work on Health Accounts Eva Orosz OECD Health Division Joint OECD/ONS/Government of Norway Workshop “Measurement of non-market output in education and health” London, 3-5 October, 2006

2. Overview of presentation • Basic features of the System of Health Accounts (SHA) • Main purposes and components of Health Accounts developmental work in 2007-2008 OECD Programme of Work on Health • Key issues in creating appropriate links between the “Non-market” project and the SHA developmental work • Requirements for inclusion of new methodologies in the SHA Manual Version 2.0

3. Basic features of the System of Health Accounts (Version 1.0) published in 2000 • International statistical standard(an integrated system of comprehensive and internationally comparable accounts and basic accounting rules) • Designed to meet the needs of health policy analysis • ‘Functional’ definition of health care goods and services • ICHA (1.0): International Classification for Health Accounting: • Functions of health care services and goods (ICHA-HC) • Categories of providers (health care industries) (ICHA-HP) • Sources of funding /financing schemes (ICHA-HF) • Standard SHA tables cross-classify expenditures under the three basic dimensions

4. SHA: Definition of health care Activities pursuing, through the application of medical, paramedical and nursing knowledge and technology (including pharmaceuticals), the goals of: • promoting health and preventing disease; • curing illness and reducing premature mortality; • caring for persons affected by chronic illness who require nursing care; • caring for persons with health-related impairment, disability, and handicaps who require nursing care; assisting patients to die with dignity; • providing and administering public health; • administering health insurance and other funding arrangements Regardless whether provided by health care or other institutions

5. SHA implementation in OECD countries: Joint OECD, Eurostat and WHO Questionnaire

6. Main factors limiting international comparability of health expenditure data • Differences in boundaries of the health sector (e.g., in definition of Long-term care) • Differences in applying the functional classification (e.g., separation of inpatient care, day care, outpatient care within hospitals) • Lack of reliable healthcare price indices • For international comparison, health expenditure are deflated by economy-wide (GDP) price indices • Lack of reliable health-specific Purchasing Power Parities (PPPs) • economy-wide PPPs are used

7. Growing expectations towards Health Accounts To contribute to the analysis of health system performance • Sustainable financing • Cost-effectiveness (Outcome / Input) • Technical efficiency (Output / Input) • Equity in financing • Equity in access to care

8. Main components of Health Accounts developmental work in 2007-2008 OECD Programme of Work on Health • Refinement of the International Classification for Health Accounts (ICHA); including the project on Estimating Expenditure by Disease, Age and Gender • Refinement of the SHA framework for health financing • Incorporating input, output and productivity measurement into the SHA Framework; • Development of reliable health-specific Purchasing Power Parities (PPPs); • Strengthening the connection between SHA and SNA

9. Necessity for appropriate links between SNA developmental work with implication for health and the SHA developmental work Health Accounts are expected to provide relevant information • for health policy analysis, and • to show the importance of the health sector within the national economy Characteristics of the System of Health Accounts (SHA) • should reflect the specific features of health systems, and • have appropriate linkages to the SNA

10. Development of reliable health-specific Purchasing Power Parities (PPPs) Status: a component of the proposals under discussion in the framework of EU Contribution to OECD work on health Aim of the project: to develop output-based PPPs for health goods and services • appropriate for cross-country comparison of health expenditure • provide input to economy-wide PPPs Components • Development of concepts and methodology • Assessment of data availability and feasibility of data development • Formulation of joint OECD/Eurostat guidelines Organisation • The OECD would set up a PPP-SHA Task Force specifically devoted to health PPPs (takes over health-related tasks from the current Eurostat/OECD Task Force)

11. Key issues in creating appropriate links between the “Non-market” project and the SHA developmental work • To clarify the differences and explore the possibilities for harmonisation in respect to: • Key information required by National Accounts and Health Accounts (basic indicators, level of disaggregation) • Different focuses on the role of government (SHA: government financing; SNA: non-market production) • Scope of health services and goods included in output measurement (treatment of medicines) • Possible options for quality adjustment of output

12. Key information required • Health Accounts: input, output and productivity • of the whole health sector • of resources used/spent bygovernment (including “purchase” from private providers) • by main type of services (inpatient, day-care, outpatient) and by main type of diseases • National Accounts: input, output and productivity • of the health sector as a whole • by the government as producer of the services

13. Differences between SHA and SNA in the scope of services and goods included in output measurement • Currently proposed health output (and productivity) measurement under SNA: • does not include pharmaceuticals provided to outpatients (while pharmaceuticals are included in inpatient care) • does not include health care administration • includes only LTCprovided in hospitals • SHA: • As defined earlier, including all these items • Purchasing Power Parity estimation • Includes pharmaceuticals

14. Total expenditure on health services and goods defined under SHA

15. Public expenditure on health services and goods defined under SHA

16. A consistent method for comparison of output over time requires the inclusion of prescribed medicine In-Patient care Drugs during treatment Medical procedures Shift to Out-Patient care Prescribed drugs Medical service

17. A consistent method for comparison of output over time requires the inclusion of prescribed medicine • Prescribed pharmaceuticals constitute an integral part of medical therapies applied in outpatient care • Changes in medical technology (including pharmaceuticals) resulted in considerable differentiation in the nature of outpatient care • Outpatient cases differ to a great extent according to the pharmaceutical and diagnostic (laboratory, diagnostic imaging) costs they generate • A possible approach: • To connect prescribed medicine to out-patient care (as part of cost-weights) • Similarly to inpatient care, output of out-patient care should reflect the changes in case-mix

18. Health (Care) Production Process INPUTS (IP) Resources, Costs OUTPUTS (OP) e.g. DRGs, Bundle of activities, Services etc. OUTCOMES (OC) e.g. QALYs health related quality of life Technical and Cost Efficiency= OP/IP Effectiveness= OC/OP OC/IP = Cost effectiveness = (OP/IP)*(OC/OP) The relationship between input, output and outcome

19. Questions for further consideration Option A • Adjust output with quality related to delivery of services (e.g., medical errors, waiting time, etc.) and separately develop the indicators of effectiveness and cost-effectiveness Option B • Adjust output with outcome (health-gain)

20. Requirements for inclusion of new methodologies in the SHA Manual Version 2.0 • Policy relevance • Theoretical soundness • International comparability • Available data sources or adequate estimation methods • Feasibility of regular data collection under the Joint OECD, Eurostat and WHO Health Accounts data collection in the foreseeable future