OECD Handbook on Measuring Volume Output of Education and Health Chapter 3: Health

1. OECD Handbook on Measuring Volume Output of Education and HealthChapter 3: Health Sandra Hopkins OECD Health Division June 2007

2. Accurate & comparable measures of both the size and the growth of the health sector are important • Health spending is increasing across OECD countries and is accounting for a growing share of GDP. • Governments and citizens are interested in knowing whether health funds are well spent for purposes of accountability and resource allocation, and for informing individual choices. • International comparisons are one of the most powerful mechanisms for evaluation of and change in national health systems. • As the ultimate goal of health services is to improve people's health, there is a growing interest in the quality of health services.

3. How health is produced • Health industry contribution • Socioeconomic factors • Behavioural factors • Environmental factors • Personal factors • Personal effort is important Desirable to distinguish between contribution of health industry and non-health factors which impact on outcome • “Marginal contribution of the health care industry to outcome”

4. Terminology and concepts • The three main issues which underlie all discussions: • Identification of homogeneous goods and services • Aggregation of quantities of these goods and services • Treatment of new products

5. Measurement of Health Volume OutputNumber of quality-adjusted, complete treatments differentiated by type of disease Aggregation of quantities of goods and services: • Health volume output can be measured at 2 levels: disease or institution 1. Aggregation by disease or illness Complete treatment refers to the pathway that an individual takes through heterogeneous institutions – offices of doctors, hospitals, medical laboratories etc. – in order to receive full and final treatment for a disease or condition

6. Aggregation by disease or illness Benefits: • “Our concern should be not where the money comes from and where it goes but what it buys.” (Triplett 2001) • The summing of points of contact with the health system to estimate a complete treatment means that if clinical practice changes over time, and is associated with a change in the cost of providing the service, this will be reflected in the output measure e.g movement to day-only surgery and non-invasive types of surgery.

7. Aggregation by disease or illness Problems: • In SNA, total output of an activity is based on summing up outputs of various service providers. Principle is directly applicable only if the service provider is the same during the whole treatment. • Demanding data requirements e.g. linking patient treatment across providers, ability to determine the beginning & end point of treatment • Cost of illness studies require disease specific price indexes for conversion into volumes. Difficult in a nonmarket system.

8. Measurement of Health Volume Output b) Aggregation across institutions • DRGs aggregate across a hospital treatment, usually acute episodes only • There is no international DRG system • Aggregation across other providers is problematic e.g. doctors, psychiatric hospitals etc.

9. Figure 3.1 Differences in measurement between inpatient and outpatient care

10. Market activities in health • Considerable variation between countries in terms of what is considered to be a market activity and what is nonmarket • In many economies, dental services and medical & diagnostic laboratories may be considered as market activities • But overall, health industry is characterised by a number of market failures and well insured consumers.

11. Improvements and new services and goods in health • Although quantity indicators have the potential to capture some of the impact of improvements and new goods and services in health, they will not capture all. • Volume output should be adjusted for the improvement in health outcomes which are due to the introduction into the health industry of new treatments as well as improvements in the existing practices. • The adjustment in output should reflect the marginal contribution of the health industry to an outcome which is valued by the consumer. Individuals are primarily concerned when seeking health care that they receive the most effective and safe treatment available to improve their health outcomes.

12. Improvements and new services and goods in health Indicators which reflect changes in outcomes as a result of quality changes can be categorised into three types: • process measures e.g. rate of nosocomial diseases, post surgery femur fracture rates; • responsiveness measures e.g. waiting times, patient satisfaction; and • outcome measures e.g. cancer survival rates, asthma mortality rates, stroke case fatality rates, QALYs, DALYs etc.

13. Desirable characteristics of an indicator There are a number of desirable characteristics of indicators which could be used for quality adjustment for volume output for determining the marginal contribution of the health industry to outcome. Indicators should be: • consistent over time (and preferably updated annually). • standardised across countries to facilitate international comparisons. • have possibilities to reflect marginal contributions of the health industry which are either positive or negative. • reflect changes in health outcomes which are attributable to health interventions only.

15. Castelli et al (2007) developed quality adjusted cost weighted output indexes Limited developments in quality adjusting health volume output

16. Issue for consideration in quality adjustment • What are the characteristics of health care that consumers value? • What sort of indicators should be included – process, responsiveness and/or outcome? • What is the appropriate health gain indicator e.g. QALY, AMI 30-day case fatality rate/inhospital mortality rate? • The index formula – how to combine aspects of quality (additive vs. multiplicative)

17. Recommendations on measuring health volume output What is required to get a reliable and consistent measure of quality adjusted health volume output? • Steps towards complete treatment by disease e.g. consistent methodology for cost of illness studies under revision of System of Health Accounts Manual • More development of international classifications is required e.g. harmonisation of DRGs and development of outpatient DRGs • Consensus is required on what indicators should be used for quality adjustment and the role of some quality indicators, e.g. waiting times