New approaches to measuring non-market
output in national accounts: Implications for
OECD work on Health Accounts
Eva Orosz
OECD Health Division
Joint OECD/ONS/Government of Norway Workshop
“Measurement of non-market output in
education and health”
London, 3-5 October, 2006
1
Overview of presentation

Basic features of the System of Health Accounts
(SHA)

Main purposes and components of Health Accounts
developmental work in 2007-2008 OECD Programme
of Work on Health

Key issues in creating appropriate links between the
“Non-market” project and the SHA developmental
work

Requirements for inclusion of new methodologies in
the SHA Manual Version 2.0
2
Basic features of the System of Health Accounts
(Version 1.0) published in 2000

International statistical standard (an integrated system of
comprehensive and internationally comparable accounts
and basic accounting rules)

Designed to meet the needs of health policy analysis

‘Functional’ definition of health care goods and services

ICHA (1.0): International Classification for Health
Accounting:
– Functions of health care services and goods (ICHA-HC)
– Categories of providers (health care industries) (ICHA-HP)
– Sources of funding /financing schemes (ICHA-HF)

Standard SHA tables cross-classify expenditures under
the three basic dimensions
3
SHA: Definition of health care
Activities pursuing, through the application of medical, paramedical
and nursing knowledge and technology (including
pharmaceuticals), the goals of:

promoting health and preventing disease;

curing illness and reducing premature mortality;

caring for persons affected by chronic illness who require
nursing care;

caring for persons with health-related impairment, disability, and
handicaps who require nursing care; assisting patients to die
with dignity;

providing and administering public health;

administering health insurance and other funding arrangements
Regardless whether provided by health care or other institutions
4
SHA implementation in OECD countries: Joint
OECD, Eurostat and WHO Questionnaire
Data have been (or will
be) provided to the 2006
Joint Health Accounts
data collection
SHA results are
available for a pilot
study or some
previous years. Data
provided only to OECD
Health Data in 2006
Data provided to
OECD Health Data
based on national
statistics so far
Australia, Belgium,
Canada, Czech Republic,
France, Germany, Japan,
Korea, Luxembourg,
Netherlands, Norway,
Poland, Portugal, Slovak
Republic, Spain,
Switzerland, United States
Denmark, Finland,
Hungary, Mexico,
Sweden, Turkey, United
Kingdom,
Austria*, Greece*,
Iceland*, Ireland*,
Italy, New Zealand,
*/SHA implementation
planned or currently
underway
5
Main factors limiting international
comparability of health expenditure data

Differences in boundaries of the health sector (e.g., in
definition of Long-term care)

Differences in applying the functional classification (e.g.,
separation of inpatient care, day care, outpatient care
within hospitals)

Lack of reliable healthcare price indices
– For international comparison, health expenditure are
deflated by economy-wide (GDP) price indices

Lack of reliable health-specific Purchasing Power Parities
(PPPs)
– economy-wide PPPs are used
6
Growing expectations towards Health
Accounts
To contribute to the analysis of health system
performance





Sustainable financing
Cost-effectiveness (Outcome / Input)
Technical efficiency (Output / Input)
Equity in financing
Equity in access to care
7
Main components of Health Accounts
developmental work in 2007-2008 OECD Programme
of Work on Health

Refinement of the International Classification for
Health Accounts (ICHA); including the project on
Estimating Expenditure by Disease, Age and Gender

Refinement of the SHA framework for health
financing

Incorporating input, output and productivity
measurement into the SHA Framework;

Development of reliable health-specific Purchasing
Power Parities (PPPs);

Strengthening the connection between SHA and SNA
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Necessity for appropriate links between SNA
developmental work with implication for health and
the SHA developmental work
Health Accounts are expected to provide relevant information
 for health policy analysis, and
 to show the importance of the health sector within the
national economy
Characteristics of the System of Health Accounts (SHA)

should reflect the specific features of health systems, and

have appropriate linkages to the SNA
9
Development of reliable health-specific Purchasing
Power Parities (PPPs)
Status: a component of the proposals under discussion in the
framework of EU Contribution to OECD work on health
Aim of the project:
to develop output-based PPPs for health goods and services
– appropriate for cross-country comparison of health expenditure
– provide input to economy-wide PPPs
Components
– Development of concepts and methodology
– Assessment of data availability and feasibility of data development
– Formulation of joint OECD/Eurostat guidelines
Organisation
– The OECD would set up a PPP-SHA Task Force specifically
devoted to health PPPs (takes over health-related tasks from the
current Eurostat/OECD Task Force)
10
Key issues in creating appropriate links between
the “Non-market” project and the SHA
developmental work

To clarify the differences and explore the possibilities
for harmonisation in respect to:

Key information required by National Accounts and
Health Accounts (basic indicators, level of
disaggregation)
Different focuses on the role of government (SHA:
government financing; SNA: non-market production)
Scope of health services and goods included in
output measurement (treatment of medicines)
Possible options for quality adjustment of output



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Key information required

Health Accounts: input, output and productivity
– of the whole health sector
– of resources used/spent by government (including
“purchase” from private providers)
– by main type of services (inpatient, day-care,
outpatient) and by main type of diseases

National Accounts: input, output and productivity
– of the health sector as a whole
– by the government as producer of the services
12
Differences between SHA and SNA in the scope of
services and goods included in output
measurement

Currently proposed health output (and productivity)
measurement under SNA:
– does not include pharmaceuticals provided to outpatients
(while pharmaceuticals are included in inpatient care)
– does not include health care administration
– includes only LTC provided in hospitals

SHA:
– As defined earlier, including all these items

Purchasing Power Parity estimation
– Includes pharmaceuticals
13
Total expenditure on health services and goods
defined under SHA
14
Public expenditure on health services and goods
defined under SHA
15
A consistent method for comparison of output over
time requires the inclusion of prescribed medicine
In-Patient care
Drugs
during
treatment
Medical
procedures
Shift to OutPatient care
Prescribed
drugs
Medical
service
16
A consistent method for comparison of output over
time requires the inclusion of prescribed medicine




Prescribed pharmaceuticals constitute an integral part of
medical therapies applied in outpatient care
Changes in medical technology (including pharmaceuticals)
resulted in considerable differentiation in the nature of outpatient
care
Outpatient cases differ to a great extent according to the
pharmaceutical and diagnostic (laboratory, diagnostic imaging)
costs they generate
A possible approach:
– To connect prescribed medicine to out-patient care (as part
of cost-weights)
– Similarly to inpatient care, output of out-patient care should
reflect the changes in case-mix
17
The relationship between input, output and outcome
Health (Care) Production Process
INPUTS (IP)
Resources,
Costs
OUTPUTS (OP)
e.g. DRGs, Bundle
of activities,
Services etc.
Technical and Cost
Efficiency= OP/IP
OUTCOMES (OC)
e.g. QALYs
health related
quality of life
Effectiveness=
OC/OP
OC/IP = Cost effectiveness =
(OP/IP)*(OC/OP)
18
Questions for further consideration
Option A
 Adjust output with quality related to delivery of
services (e.g., medical errors, waiting time, etc.) and
separately develop the indicators of effectiveness
and cost-effectiveness
Option B
 Adjust output with outcome (health-gain)
19
Requirements for inclusion of new methodologies
in the SHA Manual Version 2.0

Policy relevance

Theoretical soundness

International comparability

Available data sources or adequate estimation
methods

Feasibility of regular data collection under the Joint
OECD, Eurostat and WHO Health Accounts data
collection in the foreseeable future
20