1 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.

1

The Measurement of Output and Productivity in the Health Care Sector in Canada: An Overview

Dr. Andrew SharpeExecutive Director of the Centre for the Study of Living Standards

(CSLS)

Improving Measures of Health Care Output and Outcomes in CanadaCanadian Medical Association (CMA)

Centre for the Study of Living Standards (CSLS)Ottawa, Ontario

Tuesday, October 30, 2007

2

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.

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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 quality-adjusted 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).

4

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?

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Real and Nominal Health Expenditures in Canada as Shares of Total

Economy GDP, 1984-2006

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Per

cent Nominal Health

Expenditures

Real HealthExpenditures (1997base year)

Source: Sources: Canadian Institute for Health Information (2006), "National Health Expenditure Trends", Ottawa, 169 pages; Statistics Canada National Accounts

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Employment Shares in the Health Care and Social Assistance Industry in Canada, 2006

Hospitals [622]35%

Nursing and Residential Care Facilities [623]

17%

Social Assistance [624]25%

Ambulatory Health Care Services [621]

23%

Source: Statistics Canada Labour Force Survey

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Health Care and Social Assistance Employment in the Business and Non-Business Sectors as a Percentage of Total Health Care and Social

Assistance Employment in Canada, 2005

Non-Business Sector62.6%

Business Sector37.4%

Source: Statistics Canada Table 383-0010

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Employment in the Health Care and Social Assistance Industry in Canada, 1987-2006 (average annual growth rates)

2.33

3.71

0.83

2.73

3.58

1.54

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Heath Care andSocial Assistance

[62]

AmbulatoryHealth Care

Services [621]

Hospitals [622] Nursing andResidential CareFacilities [623]

Social Assistance[624]

Total EconomyEmployment

Per

cen

t

Source: Statistics Canada Labour Force Survey

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Nominal Output in the Health Care and Social Assistance Industry in Canada, 1984-2003 (average annual growth rates)

5.80

4.66

6.65

5.27

0

1

2

3

4

5

6

7

Health Care and SocialAssistance [62]

Hospitals [622] Health Care Services(excluding hospitals) andSocial Assistance [62A]

Total GDP

Per

cen

t

Source: Statistics Canada National Accounts

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Deflators for the Health Care and Social Assistance Industry in Canada, 1984-2003

3.793.60

3.95

2.34

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Health Care and SocialAssistance Industry [62]

Deflator

Hopital Industry [622]Deflator

Health Care Services(excluding hospitals) and

Social Assistance Industry[62A] Deflator

GDP deflator

Per

cen

t

Source: Calculated by the CSLS based on figures from the Statistics Canada National Accounts

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Real Output in the Health Care and Social Assistance Industry in Canada, 1984-2003 (average annual growth rates, 1997 dollars)

1.93

1.02

2.602.86

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Health Care and SocialAssistance [62]

Hospitals [622] Health Care Services(excluding hospitals) andSocial Assistance [62A]

Total GDP

Per

cen

t

Source: Statistics Canada National Accounts

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Health Care and Social Assistance Industry Deflator in Canada, 1984-2003

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Def

lato

r

GDP deflator

Health Care andSocial AssistanceIndustry [62]Deflator

Source: Calculated by the CSLS based on the Statistics Canada National Accounts

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Real and Nominal Output of the Health Care and Social Assistance Industry in Canada as a Percentage of Total Output, 1984-2003

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Per

cen

t

Real Output

NominalOutput

Source: Calculated by the CSLS based on the Statistics Canada National Accounts

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Real GDP per Worker in the Health Care and Social Assistance Industry in Canada, 1987-2006 (average annual growth rates)

-0.76

0.28

-1.41

1.14

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

Health Care and SocialAssistance [62]

Hospitals [622] Health Care Services(excluding hospitals) andSocial Assistance [62A]

All Industries

Per

cen

t

Source: Calculated by the CSLS based on the Statistics Canada National Accounts and Labour Force Survey

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Real GDP per Worker in the Health Care and Social Assistance Industry as a Percentage of the All Industry Average in Canada, 1987-2006

0

10

20

30

40

50

60

70

80

90

19871988

19891990

19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

Per

cen

t

Health Care and SocialAssistance [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

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Official Statistics Canada Productivity Estimates in the Health Care (excluding hospitals) and Social Assistance Industry in Canada, 1994-

2003 (average annual growth rates)

-2.85

-3.83

0.57

-0.28

-5

-4

-3

-2

-1

0

1

Based on Gross Output Based on Value Added Based on Gross Output Based on Value Added

Multifactor Productivity Labour Productivity

Per

cen

t

Source: Statistics Canada CANSIM Table 383-0022

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Mortality Rate per 100,000 by Selected Causes in Canada, 1979-2003

0

20

40

60

80

100

120

140

160

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Mor

talit

y R

ate

per

100

,000

Colorectal Cancer

Lung Cancer

Acute MyocardialInfarction (HeartAttack)

CerebrovascularDiseases

Source: Statistics Canada, Vital Statistics, Death Database, and Demography Division (population estimates) CANSIM Tables 102-0026 and 102-0126

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Health Outcomes in Canada, 1994-2005

0

5

10

15

20

25

30

35

1994 1996 1998 2000 2003 2005

Per

cen

t

Percentage of respondents with fair or poorself-rated health

Percentage of respondents who reportedhaving moderate or severe health problems

Percentage of respondents who reportedstaying in bed or cutting down on activities atleast once in the past two weeks

Percentage of respondents who reportedhaving a disability or being limited in certainactivities on a continuous basis (at least 6months) because of a health problem

Source: CANSIM “Health Indicators” vol. 2007(1). Catalogue no. 82-221-XIE

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Health Outcomes, Health Productivity and Health Output Per Capita in Canada, 1987-2004

70

75

80

85

90

95

100

105

110

115

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Ind

ex, 1

987=

100

Life expectancy atbirth

Real GDP per workerin the health care andsocial assistanceindustry

Real GDP of thehealth care and socialassistance industryper capita

Source: Statistics Canada, Vital Statistics, Death Database, Demography Division Tables 102-0025 and 102-0511; CSLS calculations based on Statistics Canada LFS and National Accounts