Health Care Cost Drivers:
Hospital and Other Health
Expenditures—Descriptive
Overview
April 28, 2011
1
Overview
• What are the growth trends in health spending
categories other than hospitals, physicians and drugs?
• What are some of the key trends in public-sector
spending on long-term care?
• How have capital investments in buildings and
equipment affected overall spending?
• What are the key issues to watch in the future?
2
Overview of Other
Health Expenditures
3
Rising Share of Other Health Expenditures
During the 1990s
Share of Total Health Expenditure by Use of Funds,
Selected Categories
50%
40%
41.6 41.1
39.1
34.4
30%
29.6 28.9
20%
15.4
16.3
11.4
15.2
13.4 13.7
10%
0%
Hospitals
Drugs
1990
Physicians
2000
Other
2010f
4
Long-Term Care, Public Health and Capital Are
Significant Categories of Other Health Spending
Distribution of Other Health Expenditures by Category, 2010f
Public Sector: $46.5 Billion
Other
$3.7; 8%
Capital
$6.9; 15%
6%
Administration
$2.7; 6%
Public Health
$12.2; 26%
Health Research
$2.3; 5%
Other Professionals
$1.5; 3%
Home Care
$3.9; 8%
Other Institutions
$13.3; 29%
Dental Care: 44%
Vision Care: 20%
5
Public Health, Capital and Long-Term Care
Are Mainly Financed by the Public Sector
Public-Sector Share of Categories
100 100
100%
80%
76
81
71
63
67
83
62
55
60%
61
44
40%
20%
10
7
0%
1998
2008
6
Capital, Health Research and Public Health:
The Fastest-Growing Categories
Public-Sector Average Annual Growth, 1998 to 2008
16%
Average Annual Growth
13.7
12%
11.3
9.6
8%
7.7
6.6
5.4
4%
0%
7
Increased Spending on Public Health
Public Health Expenditure as a Percentage
of Total Public-Sector Spending
10%
8%
6%
4%
2%
0%
1975
1980
1985
1990
1995
2000
2005
2010f
8
Share of Public-Sector Administration Spending
Relatively Unchanged in the Past Five Years
Public-Sector Administration Expenditures as a Percentage of Total
4%
3.5
3.2
3.7
3.8
3.8
3.7
3.5
3.5
3.4
3.4
3.3
3%
2%
1%
0%
9
Growth in Spending on Other Health Professionals
Higher in the Private Sector
$600
5.6%
6%
$500
5%
$400
4%
$300
3%
$200
2%
1.7%
$100
1%
Average Annual Growth
Per Capita Spending
$515
$41
$0
0%
Public
Per Capita (2008)
Private
AAG (1998–2008)
10
More Health Professionals
2004
2004
Number of
Physicians
Number of
Regulated Nurses
Number of
Dentists and
Dental Hygienists
Number of
Optometrists
60,612
Percentage
2008
Change
8.0%
65,440
315,135 341,431
Percentage
Population
Increase
8.3%
35,866
41,798
16.5%
3,941
4,507
14.4%
4.2%
11
Public-Sector Spending
Trends in Long-Term Care
12
The Structure of the 65+ Population Has
Shifted Toward Older Seniors
35%
Share of Each Senior Age Group in the 65+ Population
31
30%
29
26
25%
23
20
20%
20
15
15%
13
13
10
10%
5%
0%
65–69
70–74
75–79
1998 Age Distribution
80–84
85+
2008 Age Distribution
13
Long-Term Care Does Not Account for Increasing
Share of Public-Sector Health Expenditure
Public-Sector Expenditures on Long-Term Care as a Percentage of Total
16%
2.9
2.9
2.9
2.8
2.8
12%
2.7
2.7
2.7
2.7
2.8
2.8
10.8
10.3
10.0
8%
12.1
12.0
11.8
11.7
11.6
11.4
11.4
11.0
4%
0%
15.0%
10.0%
5.0%
Institutional Care
Home Care
14
Growth Rates in Long-Term Care Institution
Spending per Capita for the Oldest Senior Age
Groups Among the Lowest
4%
$12,000
AAG: 1998–2008
$10,000
3%
$8,000
2%
$6,000
$4,000
1%
$2,000
0%
$0
65–69
70–74
75–79
Growth in Expenditure per Capita
80–84
85–89
90+
Expenditure per Capita (2008)
15
Population Aging: Greater Effect in
Long-Term Care Institutions
Average Annual Growth in Spending Attributable
to Population Aging, 1998 to 2008
Average Annual Growth
3%
2.3
2%
1%
0.8
1.0
1.0
0.6
0%
16
Beds Staffed and in Operation per
1,000 Seniors Relatively Unchanged
Beds per 1,000 Population (65+)
30
25
20
15
10
5
0
2004
2005
2006
Public
2007
2008
Private
17
Average Annual Growth Rate in Number of
Beds in Long-Term Care Institutions per 1,000
Seniors Varied in Selected G7 Countries
Average Annual Growth
2004 to 2008
3.0
3.0
2.0
1.0
0.3
0.0
0.0
0.2
-0.1
-0.5
-1.0
United
States
United
Kingdom
Japan
Italy
Germany
(2003–2007)
Canada
18
Compensation Unchanged, Number of
Full-Time Equivalents Increasing
Inflation-Adjusted Salary and Wage Expenditures
per Full-Time Equivalent, and Number of Full-Time
Equivalents per 100,000 Population
$40.000
800
$30.000
600
$20.000
400
$10.000
200
$0.000
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Salary and Wage Expenditures per FTE
FTE/100,000
19
An Increase of More Than $1 Billion in
Home Care Spending
5.0
Provincial/Territorial Government Spending
on Home Care, Current Dollars
$3.9
$ Billions
4.0
3.0
$2.6
2.0
1.0
0.0
1999–2000
2006–2007
20
Government-Sponsored Home
Care Users Rising
30
25
Government-Sponsored Home Care Users
per 1,000 Population
28.1
23.9
20
15
10
5
0
1994
2005
21
Higher Proportion of Residents 85+ in
Homes for the Aged
60%
Percentage Distribution of Residents 65+ in Homes
for the Aged
54.5
50.4
50%
40%
30%
22.6 22.0
20%
10%
14.8
4.1 4.1
12.7
8.1 6.7
0%
65–69
70–74
75–79
1998
80–84
85+
2008
22
Rising Proportion of Residents in Homes
for the Aged Receiving Type III and
Higher Care
35%
33%
30%
25%
25%
20%
15%
10%
5%
0%
1998
2008
23
Alternate Level of Care Is an
Important Issue
• In 2008–2009, there were more than 92,000
hospitalizations and more than 2.4 million hospital
days involving alternate level of care stays in Canada.
This represented 5% of all hospitalizations and 13% of
all hospital days.
• There is a perception that a growing proportion of
elderly patients tie up hospital beds while waiting
for a place in long-term care.
24
Overview of Capital
Expenditures
25
Share of Public-Sector Spending on Capital
Trended Upwards in the Last Decade
Capital Spending as a Percentage of Total Public-Sector
Health Spending
6%
5%
4%
3%
2%
1%
0%
1975
1980
1985
1990
1995
Capital to Total
2000
2005
2010f
26
Distribution of Total Capital Expenditures
100%
53
49
47
47
40
40
44
44
38
42
36
47
51
53
53
60
60
56
56
62
58
64
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
80%
60%
40%
20%
0%
Equipment
Construction
27
Capital Expenditure in Health Care
Capital investment by type of asset
1) Construction: facilities and building construction
2) Equipment
Annual Capital Investment by Type of Asset, 1998 to 2008
Value ($ Billions)
Type of Asset
1998
(% of Total)
2008
(% of Total)
AAG
1998–2008
Equipment
1.2
53.5%
3.0
36.3%
9.3%
Construction
1.1
46.5%
5.2
63.7%
17.2%
Total
2.3
100%
8.2
100%
13.6%
28
Increasing Share of Capital Spending for
Residential Care Facilities
1998
2008
Total Capital Spending: $2.3 Billion
Total Capital Spending: $8.2 Billion
Nursing and
Residential
Care
Facilities
16.5%
Nursing and
Residential
Care
Facilities
11.4%
Social
Assistance
2.5%
Ambulatory
Health Care
Services
10.9%
Hospitals
75.2%
Hospitals
73.2%
Social
Assistance
0.8%
Ambulatory
Health Care
Services
9.5%
29
Overall Key Findings
• Long-term care does not account for an increasing
share of health spending in the public sector
• The number of full-time equivalent (FTE) personnel
(not wages per FTE) is mainly responsible for the
increase in institutional care spending
• From 2004 to 2008, trends in beds staffed and in
operation kept pace with demographics
• Capital investment in the health care sector
significantly increased from 1998 to 2008; the trend
was led mostly by long-term care institutions
30
Key Issues to Watch in the Future
• What is the best way to provide care for seniors?
– What will be the balance between hospital care,
institutional care and home care during the next decade?
– How will the system optimize the integration of
seniors’ care?
• How will provincial deficits and fiscal restraint in future
years affect investment in public health and capital?
31
Thank You
32