Health care systems:
efficiency and policies
Isabelle Joumard, OECD, Economics Department
“New Directions in Welfare”
OECD Universities’ Joint Congress, 6-8 July 2011
Weak link between health care spending
and outcomes
Life expectancy at birth, years
84
jpn
82
80
kor
prt
che
ita aus
fra
can
esp isl
aut
swe
nzl
lux
fin deu
grc
nld
bel irl
gbr
nor
dnk
78
cze
usa
76
mex
pol
svk
74
tur
hun
72
0
1000
2000
Source: OECD Health Data 2010.
3000
4000
5000
6000
7000
8000
Total expenditure on health per capita, US $ PPP
Presentation outline
1. Measuring health care spending
efficiency
2. Reaping efficiency gains: why
(effect on public spending) and how
1. Measuring health care efficiency:
difficulties
 No obvious definition of health care
outcomes and inputs; cross-country data on
outcomes are imperfect
 A large variety of actors (hospitals,
outpatient physicians, drug companies, etc.)
and co-ordination matters a great deal
 Mix of public and private spending
1. Measuring health care efficiency:
OECD approach
 Choose an outcome indicator
 … and an input indicator
 Identify the other determinants
 Implement various approaches (panel
regressions and DEA) and robustness checks
 Complement/compare the overall efficiency
index with other performance indicators
Life expectancy at birth
Total population, 1960 and 2007
2007
1960
Japan
Switzerland
Australia
Italy
Iceland
Spain
France
Sweden
Canada
Norway
New Zealand
Netherlands
Austria
Germany
Belgium
Ireland
Finland
United Kingdom
Greece
Luxembourg
Korea
Portugal
OECD
Denmark
United States
Czech Republic
Poland
Mexico
Slovak Republic
Hungary
Turkey
82.6
81.9
81.4
81.4
81.2
81.0
81.0
81.0
80.7
80.6
80.2
80.2
80.1
80.0
79.8
79.7
79.5
79.5
79.5
79.4
79.4
79.1
79.1
78.4
78.1
77.0
75.4
75.0
74.3
73.3
73.2
90
80
70
Years
Source: Health at a Glance 2009, OECD Indicators.
60
50
40
Amenable mortality
All causes, 2007 or latest year available
France
Iceland
Italy
Japan
Sweden
Netherlands
Australia
Austria
Norway
Spain
Canada
Luxembourg
Finland
Greece
Israel*
Germany
Ireland
New Zealand
United Kingdom
Korea
Denmark
Slovenia
OECD
Chile
United States
Portugal
Czech Republic
Mexico
Poland
Slovak Republic
Hungary
Estonia
0
50
100
150
200
250
Age-standardised rates per 100 000 population
Source: Gay et al. (2011), "Mortality Amenable to Health Care in 31 OECD Countries: Estimates and Methodological Issues", OECD Health Working Paper, No. 55.
No trade-off between raising equity and the
average health status
Life expectancy at birth (years), 2007
84
y = -1.84x + 104.6
(t= -3.2) (t=13.4)
R² = 0.30
jpn
82
80
swe
nld
che
isl
esp
ita
aus
can
aut
nor
irl
deu
lux
dnk
78
bel
gbr
fra
nzl
fin
usa
prt
cze
76
pol
svk
74
hun
72
12.0
12.5
13.0
13.5
14.0
14.5
15.0
15.5
Health inequality
Source: OECD Health Data.
Life expectancy at 65, women
Women, 1970 and 2007
2007
1970
Japan
France
Switzerland
Spain
Italy
Australia
Canada
Finland
Belgium
Norway
Austria
Germany
New Zealand
Sweden
Iceland
Korea
Netherlands
United States
Luxembourg
OECD
Portugal
United Kingdom
Ireland
Greece
Denmark
Poland
Czech Republic
Mexico
Hungary
Slovak Republic
Turkey
23.6
22.3
22.2
22.0
21.8
21.6
21.4
21.3
21.0
20.8
20.8
20.7
20.7
20.7
20.6
20.5
20.5
20.3
20.3
20.2
20.2
20.1
20.1
19.6
19.2
18.9
18.5
18.2
17.3
17.1
15.8
25
20
15
Years
Source: Health at a Glance 2009, OECD Indicators.
10
5
Correlations between outcome measures
(level and rank)
LE at birth
Total
Life expectancy at birth, total
Life expectancy at 65, female
Adjusted PYLL, total
Health-adjusted life expectancy at birth
Amenable mortality
1.00
0.89
-0.82
0.95
-0.92
Adjusted
PYLL
LE at 65
Female
**
**
**
**
0.94
1.00
-0.64
0.85
-0.82
**
**
**
**
-0.93
-0.77
1.00
-0.84
0.85
Healthadjusted LE
**
**
**
**
0.96
0.91
-0.90
1.00
-0.93
**
**
**
**
Source: Joumard , André and Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department Working Papers, No. 769.
Amenable
mortality
-0.96
-0.86
0.91
-0.89
1.00
**
**
**
**
Health care spending
2008
Public expenditure
8000
Spending per capita, US $
7000
6000
5000
4000
3000
2000
1000
0
Source: OECD Health Data 2010.
Private expenditure
Practising physicians
per 1000 population, 2007
Greece
Belgium
Netherlands
Norway
Switzerland
Austria
Iceland
Italy
Spain2
Sweden
Czech Republic
Portugal
Germany
France
Denmark
OECD
Slovak Republic
Ireland
Finland
Luxembourg
Australia
Hungary
United Kingdom
United States
New Zealand
Poland
Canada
Japan
Mexico
Korea
Turkey
5.4
4.0
3.9
3.9
3.9
3.8
3.7
3.7
3.7
3.6
3.6
3.5
3.5
3.4
3.2
3.1
3.1
3.0
3.0
2.9
2.8
2.8
2.5
2.4
2.3
2.2
2.2
2.1
2.0
1.7
1.5
6
4
Source: Health at a Glance 2009, OECD Indicators.
2
0
Remuneration of specialists
Self-employed
350
US $ PPP, thousands
300
250
200
150
100
50
0
Source: OECD Health Data 2010.
Salaried
Remuneration of general practitioners (GPs)
Self-employed
US $ PPP, thousands
180
160
140
120
100
80
60
40
20
0
Source: OECD Health Data 2010.
Salaried
Health status determinants
 Health care resources
 Lifestyle factors: diet, alcohol and tobbaco
consumption
 Socioeconomic environment: income and
education
 Pollution
DEA – defining the efficiency frontier and
potential efficiency gains
Life expectancy at birth (years)
84
Efficiency frontier
Output inefficiency
82
80
78
Input inefficiency
76
74
72
70
0
1000
2000
3000
4000
5000
6000
Total health care spending per capita
DEA – results and sensitivity analysis
(for different outcome indicators)
Potential gains in life expectancy, years
Potential gains in amenable mortality, %
6
60
Life expectancy at birth
Life expectancy at 65
Amenable mortality (right scale)
5
50
4
40
3
30
2
20
1
10
0
0
Source: Joumard , André and Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department Working Papers, No. 769.
DEA – results and sensitivity analysis
(for different input indicators)
7
6
Potential gains in life expectancy, years
Expenditure, ENV
Health professionals, ENV
Expenditure, ESCS, Smoking
Expenditure, ESCS, Alcohol
Expenditure, ESCS, Nox
5
4
3
2
1
0
Source: Joumard , André and Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department Working Papers, No. 769.
Panel regressions – model specification
(log form)
    HCR
it i
it
 SMOK  DRINK  DIET
it
it
it
   AIRPOLit   EDUit   GDPit  it
Panel regressions:
contribution of main explanatory variables
to cross-country differences in life expectancy
Determinants
Life
expectancy
at birth Spending Education Tobacco Alcohol
United States
Germany
France
United Kingdom
Canada
Czech Republic
Korea
-0.5
0.6
1.3
0.5
1.8
-2.7
-0.6
2.9
0.8
0.9
-0.1
0.9
-1.8
-2.4
0.5
0.4
-0.2
0.4
0.4
0.5
0.1
0.0
-0.1
0.0
0.1
0.1
-0.1
0.0
0.0
-0.1
-0.3
-0.2
0.1
-0.3
0.0
Diet
Pollution
GDP
Countryspecific
effect
0.0
0.0
0.0
0.0
0.0
-0.1
0.1
-0.6
0.5
0.4
0.1
-0.8
0.0
0.3
0.6
0.1
0.2
0.2
0.3
-0.6
-0.4
-4.0
-1.0
0.4
0.0
0.9
-0.3
1.7
Source: Joumard , André, Nicq and Chatal (2008), "Health Status Determinants: Lifestyle, Environment, Health Care Resources and Efficiency ", OECD Economics
Department Working Papers, No. 627.
Panel regressions:
years of life not explained by the model
With health care resources measured in monetary terms
3
2
1
0
-1
-2
-3
-4
-5
Source: Joumard , André, Nicq and Chatal (2008), "Health Status Determinants: Lifestyle, Environment, Health Care Resources and
Efficiency ", OECD Economics Department Working Paper, No. 627.
Comparing efficiency indicators
derived from panel regressions and DEA
Panel regression (years)
7
usa
6
hun
5
nor
dnk
4
aut
tur
cze
nld
pol
che
3
swe
2
deu
fra
can
irl
gbr
fin
grc
1
kor
aus
0
0
1
2
isl
nzl
3
4
5
6
DEA (years)
7
Complementing overall efficiency score
by other performance measures -- France
Vaccinations
OECD average
Overall efficiency
Amenable mortality 2
Equity
Heart failure
ALL, in-patient care
1
Bronchitis
Colorectal cancer
0
Asthma
Influenza
-1
-2
Measles
Breast cancer
AMI
DTP
Fracture of femur
Adm. costs
Consultations/doctor
Occupancy
Turnover
Cataract
Source: OECD Health Data 2010.
Lung cancer
Average length of stay
Avoidable admissions
France
2. Reaping efficiency gains –
Large potential savings in public spending
% 2017 GDP
Source: OECD Health Data 2009; OECD calculations.
Characterising health care systems:
a new set of OECD indicators
 Level of basic insurance coverage
 Market mechanisms and regulations to
steer demand and supply of care affecting
users, providers and insurers
 Budget and management approaches
Characterising health care systems:
country groups
Source: Joumard, André and Nicq (2010), "Health Care Systems: Efficiency and Institutions " , OECD Economics Department Working Papers. No. 769.
No health care system clearly outperforms the others 
No big-bang reform is warranted
Source: Joumard, André and Nicq (2010), "Health Care Systems: Efficiency and Institutions", OECD Economics Department Working Papers, No. 769.
How to reap efficiency gains?
The new set of policy indicators provides guidance
France
User information on quality and prices
Regulation of workforce & equipement
OECD average
Population covered
5
4
Group 2
Scope of basic coverage
Depth of coverage
3
Regulation of prices billed by
providers
2
Choice of insurer, basic coverage
1
Regulation of prices paid by thirdparty payers
0
Insurer levers, basic coverage
-1
Volume incentives embedded in
provider payment schemes
Over-the-basic coverage
-2
Degree of private provision
Patient choice among providers
Stringency of the budget constraint
Gate-keeping
Priority setting
Price signals on users
Consistency
Degree of decentralisation
Delegation to insurers
To conclude
 Indicators of health care spending efficiency at the
system level can be built and are relatively robust
 They can be complemented by indicators of the
quality of care and other performance indicators
 Exploiting potential efficiency gains would help
contain public spending and result in large savings
for some countries (on average 2% of GDP by 2017)
 No health care model clearly outperforms others.
Best practices among pair countries should be
identified
For more information
 OECD (2010), Health Care Systems: Efficiency and
Policy Settings.
 Joumard, André, Nicq and Chatal (2008), "Health
Status Determinants: Lifestyle, Environment, Health
Care Resources and Efficiency", OECD Economics
Department Working Papers, No. 627.
 OECD, Health at a Glance (bi-annual publication).