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The Measurement of Output and Productivity in the Health Care Sector in Canada: An Overview Dr. Andrew Sharpe Executive Director of the Centre for the Study of Living Standards (CSLS) Improving Measures of Health Care Output and Outcomes in Canada Canadian Medical Association (CMA) Centre for the Study of Living Standards (CSLS) Ottawa, Ontario Tuesday, October 30, 2007 1 Motivation for the Conference With ageing of the population it is expected that the share of GDP devoted to health care will continue to rise. Given budget constraints, it is important that the resources devoted to health care be used in the most effective manner possible. To monitor and measure effectiveness, we must be able to accurately measure health care output and outcomes. To mobilize players in the health sector to obtain better measures of health care output and outcomes. 2 Four Reasons Why It Is So Difficult to Measure the Real Output (and Productivity) of the Health Care Sector Much of the output of the health care sector is non-marketed (e.g. hospital care) so there is no measure of nominal output independent of the value of inputs. The exact definition of what constitutes the output (as opposed to activities) of the health care sector is unclear (e.g. number of procedures performed versus successfully completed procedures, treatment of chronic conditions). Medical advances lead to quality improvements in the output of the health care sector, but it is difficult to adjust the price of medical services for these improvements. Actual price increases therefore may overestimate the true cost of qualityadjusted health care. The potential lack of direct relationship between trends in health output and productivity and health outcomes due to the wide range of factors that determine health outcomes (e.g. lifestyle, environment). 3 Key Issue Should resources be allocated to initiatives that approach health output from an industry-based national accounts perspective and attempt to develop monetary estimates of the value of the health care sector that adjust for quality changes, including health outcome changes? 4 Real and Nominal Health Expenditures in Canada as Shares of Total Economy GDP, 1984-2006 10.5 10.0 9.5 Per cent 9.0 8.5 8.0 Nominal Health Expenditures 7.5 7.0 6.5 Real Health Expenditures (1997 base year) 6.0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Sources: Canadian Institute for Health Information (2006), "National Health Expenditure Trends", Ottawa, 169 pages; Statistics Canada National Accounts 5 Employment Shares in the Health Care and Social Assistance Industry in Canada, 2006 Social Assistance [624] 25% Nursing and Residential Care Facilities [623] 17% Ambulatory Health Care Services [621] 23% Hospitals [622] 35% Source: Statistics Canada Labour Force Survey 6 Health Care and Social Assistance Employment in the Business and NonBusiness Sectors as a Percentage of Total Health Care and Social Assistance Employment in Canada, 2005 Business Sector 37.4% Non-Business Sector 62.6% Source: Statistics Canada Table 383-0010 7 Employment in the Health Care and Social Assistance Industry in Canada, 1987-2006 (average annual growth rates) 4.0 3.71 3.58 3.5 3.0 Per cent 2.5 2.73 2.33 2.0 1.54 1.5 0.83 1.0 0.5 0.0 Heath Care and Social Assistance [62] Ambulatory Health Care Services [621] Hospitals [622] Nursing and Social Assistance Residential Care [624] Facilities [623] Total Economy Employment Source: Statistics Canada Labour Force Survey 8 Nominal Output in the Health Care and Social Assistance Industry in Canada, 1984-2003 (average annual growth rates) 6.65 7 6 5.80 5.27 4.66 Per cent 5 4 3 2 1 0 Health Care and Social Assistance [62] Source: Statistics Canada National Accounts Hospitals [622] Health Care Services (excluding hospitals) and Social Assistance [62A] Total GDP 9 Deflators for the Health Care and Social Assistance Industry in Canada, 1984-2003 4.5 4.0 3.79 3.95 3.60 3.5 3.0 Per cent 2.34 2.5 2.0 1.5 1.0 0.5 0.0 Health Care and Social Assistance Industry [62] Deflator Hopital Industry [622] Deflator Health Care Services (excluding hospitals) and Social Assistance Industry [62A] Deflator Source: Calculated by the CSLS based on figures from the Statistics Canada National Accounts GDP deflator 10 Real Output in the Health Care and Social Assistance Industry in Canada, 1984-2003 (average annual growth rates, 1997 dollars) 3.5 2.86 3.0 2.60 Per cent 2.5 2.0 1.93 1.5 1.02 1.0 0.5 0.0 Health Care and Social Assistance [62] Hospitals [622] Health Care Services (excluding hospitals) and Social Assistance [62A] Total GDP Source: Statistics Canada National Accounts 11 Health Care and Social Assistance Industry Deflator in Canada, 1984-2003 1.4 1.2 Deflator 1.0 0.8 GDP deflator 0.6 0.4 Health Care and Social Assistance Industry [62] Deflator 0.2 0.0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Source: Calculated by the CSLS based on the Statistics Canada National Accounts 1996 1997 1998 1999 2000 2001 2002 2003 12 Real and Nominal Output of the Health Care and Social Assistance Industry in Canada as a Percentage of Total Output, 1984-2003 8.0 7.5 7.0 Per cent 6.5 6.0 5.5 Real Output 5.0 Nominal Output 4.5 4.0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Source: Calculated by the CSLS based on the Statistics Canada National Accounts 1996 1997 1998 1999 2000 2001 2002 2003 13 Real GDP per Worker in the Health Care and Social Assistance Industry in Canada, 1987-2006 (average annual growth rates) 1.5 1.14 1.0 Per cent 0.5 0.28 0.0 -0.5 -1.0 -0.76 -1.5 -1.41 -2.0 Health Care and Social Assistance [62] Hospitals [622] Health Care Services (excluding hospitals) and Social Assistance [62A] Source: Calculated by the CSLS based on the Statistics Canada National Accounts and Labour Force Survey All Industries 14 Real GDP per Worker in the Health Care and Social Assistance Industry as a Percentage of the All Industry Average in Canada, 1987-2006 90 80 Health Care and Social Assistance [62] 70 Per cent 60 50 Hospitals [622] 40 30 20 10 Health Care Services (excluding hospitals) and Social Assistance [62A] 0 87 88 989 990 991 992 993 994 995 996 997 998 999 000 001 002 003 004 005 006 19 19 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 Source: Calculated by the CSLS based on the Statistics Canada National Accounts and Labour Force Survey 15 Official Statistics Canada Productivity Estimates in the Health Care (excluding hospitals) and Social Assistance Industry in Canada, 1994-2003 (average annual growth rates) 1 0.57 0 -0.28 Per cent -1 -2 -3 -2.85 -4 -3.83 -5 Based on Gross Output Based on Value Added Multifactor Productivity Source: Statistics Canada CANSIM Table 383-0022 Based on Gross Output Based on Value Added Labour Productivity 16 Mortality Rate per 100,000 by Selected Causes in Canada, 1979-2003 160 Colorectal Cancer Mortality Rate per 100,000 140 120 Lung Cancer 100 80 Acute Myocardial Infarction (Heart Attack) 60 40 Cerebrovascular Diseases 20 20 03 20 01 19 99 19 97 19 95 19 93 19 91 19 89 19 87 19 85 19 83 19 81 19 79 0 Source: Statistics Canada, Vital Statistics, Death Database, and Demography Division (population estimates) CANSIM Tables 102-0026 and 17 102-0126 Health Outcomes in Canada, 1994-2005 35 Percentage of respondents with fair or poor self-rated health 30 Per cent 25 Percentage of respondents who reported having moderate or severe health problems 20 Percentage of respondents who reported staying in bed or cutting down on activities at least once in the past two weeks 15 10 Percentage of respondents who reported having a disability or being limited in certain activities on a continuous basis (at least 6 months) because of a health problem 5 0 1994 1996 1998 2000 2003 2005 Source: CANSIM “Health Indicators” vol. 2007(1). Catalogue no. 82-221-XIE 18 Health Outcomes, Health Productivity and Health Output Per Capita in Canada, 1987-2004 115 Life expectancy at birth 110 Index, 1987=100 105 100 Real GDP per worker in the health care and social assistance industry 95 90 85 Real GDP of the health care and social assistance industry per capita 80 75 70 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Statistics Canada, Vital Statistics, Death Database, Demography Division Tables 102-0025 and 102-0511; CSLS calculations based 19 on Statistics Canada LFS and National Accounts