Health system expenditure on disease and injury in Australia: Presentation to OECD Meeting of Health Accounts Experts / Sept 2005 Mr John Goss Principal Economist Australian Institute of Health and Welfare Mr John Goss Principal Economist Australian Institute of Health and Welfare

2 Overview of talk Methods (including SHA adjustments) Results Uses of disease expenditure data, including linking of inputs, outputs and outcomes

Australian Institute of Health and Welfare 3 Disease expenditures A type of satellite account which splits expenditure –By disease, –By age-sex, and –By utilisation

Australian Institute of Health and Welfare 4 Disease expenditures Data for Australia for and have been published

Australian Institute of Health and Welfare 5 Disease expenditures A top down approach to allocation of expenditure to disease. Advantage if that everything adds to 100 per cent Disease groups err on the side of largeness Total expenditure using disease expenditure estimates from disease groups is much larger than total health expenditure

Australian Institute of Health and Welfare 6 Australian disease expenditure database for ; Age groups

Australian Institute of Health and Welfare 7 Australian disease expenditure database for Disease expenditures are according to the 176 burden of disease categories. This enables integration of inputs, outputs and outcomes

Australian Institute of Health and Welfare 8 Burden of Disease chapter headings replaces ICD chapter headings as a means of presenting expenditure at the aggregate level.

Australian Institute of Health and Welfare 9 Differences from ICD chapter structure Oral health is a major expenditure (7% of total) so it is advantageous to separate it from the Digestive chapter. Diabetes is a major and growing expenditure; Therefore separating diabetes from the Endocrine chapter is of advantage.

Australian Institute of Health and Welfare 10 Dementia is in the ICD Mental disorders chapter. Alzheimer’s disease & other specific diseases causing dementia is in the ICD Nervous system chapter More logical to group all dementias together in the Nervous system chapter. Sense disorders is also a major expenditure item and is separated from other nervous disorders.

Australian Institute of Health and Welfare 11 Methods & data sources Hospital morbidity Diagnosis Related Group (DRG) weights but also –adjust for length of stay –adjust for cost of hospital varying from State average –include private medical services provided in hospital

Australian Institute of Health and Welfare 12 General Practitioner (GP) pharmaceuticals and encounters $ & no. of encounters & type of drugs come from Medicare Benefits Scheme (MBS) & Pharmaceutical Benefits Scheme (PBS) data. Pattern of scripts written by disease from 1999 to 2001 BEACH data base of GP encounters with patients (300,000 encounters)

Australian Institute of Health and Welfare 13 Specialist drugs and attendances –Specialist script dollars and type of drugs from PBS –Pattern of drugs by disease from BEACH –Referrals to specialists from BEACH used to allocate out of hospital specialist dollars and encounters.

Australian Institute of Health and Welfare 14 Areas of expenditure not allocated by disease Community mental health included, but rest of community health is not. Public health. Cancer screening programs included but rest of public health is not. Aids & appliances not included Patient transport not included

Australian Institute of Health and Welfare 15 Areas of expenditure not allocated by disease and age-sex Administration not included Overall of the $51.1 billion of personal health services & goods expenditure, 94% or $48 billion is able to be allocated by disease and age-sex. Includes hospital services, medical services, pharmaceuticals, aged care homes, dental and other health professional services

Australian Institute of Health and Welfare 16 Millions of dollars by SHA categories by age group Male Personal health care services1,0271,2901,4401,411 In-patient and day care services Out-patient services Home care. Ancillary services to health care Medical goods dispensed to out-patients Pharmaceuticals and other med. non-durables Therapeutic appliances and other med. durables.

Australian Institute of Health and Welfare 17 Total cost of disease by health sector for National Health Priority Areas, Australia, , ($millions)

Australian Institute of Health and Welfare 18 Health expenditure per person by age and sex, Australia,

Australian Institute of Health and Welfare 19 Health expend per person by age & area of expenditure,

Australian Institute of Health and Welfare 20 Utilisation data As well as dollars by disease we also have utilisation by disease. So for admitted patient hospital services we have number of DRG weighted discharges from hospital. For medical services we have number of services. For pharmaceuticals we have number of scripts.

Australian Institute of Health and Welfare 21 Uses of disease costing data Gives details of changes in expenditure, which leads to understanding of drivers of expenditure. Drivers are different for different age groups

Australian Institute of Health and Welfare 22 Change in real per capita pharmaceutical expenditure, to , All persons

Australian Institute of Health and Welfare 23 Uses of disease costing data Age-sex-disease data, and understanding drivers of expenditure very useful for projections, as can make estimates based on expected disease declines

Australian Institute of Health and Welfare 24 Decomposition of change in expenditure 2001 to 2031 for CVD treatment

Australian Institute of Health and Welfare 25 Uses of disease costing data Disease costing data is best way to solve issue of link between inputs, outputs and outcomes

Australian Institute of Health and Welfare 26 Linking inputs, outputs and outcomes INPUT (dollars) OUTPUT (hospital separation, medical service, pharmaceutical script) OUTCOME - Attributable change in health status (DALYs)

Australian Institute of Health and Welfare 27 Uses of disease costing data I will illustrate the link between inputs, outputs and outcomes with cardiovascular (circulatory) disease

Australian Institute of Health and Welfare 28 Age-standardised death rates for major causes of death, 1922–2000

Australian Institute of Health and Welfare 29 Life expectancy OECD countries 1970 to 2003

Australian Institute of Health and Welfare 30 Life expectancy OECD countries 1970 to 2003

Australian Institute of Health and Welfare 31 Reasons for decline in coronary heart disease in Australia Reduction in smoking Reduction in high blood pressure due both to lifestyle changes and drug treatment Better treatment - better care by GPs and specialists, better ambulance services, coronary bypass, stents etc Possibly better blood lipids due to better diet and hyperlipidemic agents Other factors

Australian Institute of Health and Welfare 32 Reasons for decline in coronary heart disease in Australia Most of the expenditures driving this decline are included in the disease expenditure data base Therefore the decline can be attributed to these expenditures There is debate about which part of health sector responsible for which parts of decline

Australian Institute of Health and Welfare 33 Change in real per capita pharmaceutical expenditure, to , All persons

Australian Institute of Health and Welfare 34 Cardiovascular pharmaceutical expenditure in ,71 1, ,64 1,4 26 Antihypertension agents Lipid lowering drugs Prevention$864m87%$696m80% Treatment/ prevention for those with disease $132m13%$170m19%

Australian Institute of Health and Welfare 35 Recommendation Disease expenditures should be split into treatment, preventive and maintenance/ long term care components wherever possible

Australian Institute of Health and Welfare 36 Change in per capita admitted patient expenditure, to , All persons

Australian Institute of Health and Welfare 37 Real per person increase in admitted patient expenditure for cardiovascular disease, 1994 to % % % 75+25% Total22%

Australian Institute of Health and Welfare 38 Input outcome linkage We can look at the increase in real expenditure for cardiovascular disease from to and compare it to change in Disability adjusted life years (DALYs) lost due to cardiovascular disease from 1996 to 2003

Australian Institute of Health and Welfare 39 Input outcome linkage This is a very good efficiency measure. The calculations have not yet been done as 2003 burden of disease estimates have not been completed, but it is clear from the reduction in cardiovascular deaths that the extra cardiovascular expenditure (35% increase) from 1994 to 2003 has returned many DALY benefits

Australian Institute of Health and Welfare 40 Input outcome linkage We can do these calculations for other areas as well. Eg for cancer. For we calculated that the average cost of treatment for lung cancer was $26,000 per DALY averted. For breast cancer the average cost was $3,000 per DALY averted.

Australian Institute of Health and Welfare 41 Input outcome linkage For an area like dementia there have been no DALY gains in the period 1994 to 2001, so we can’t use change in DALYs compared to change in dollars as efficiency measure. But we can measure change in real costs of care per person with dementia

Australian Institute of Health and Welfare 42 Other uses of linking disease expenditure data to outcomes ‘What if’ questions can be answered? What if smoking rates are reduced by 5 percentage points? What will be consequences over time on Disease incidence DALYs Hospital, medical & pharm utilisation Health system costs Commonwealth funding

Australian Institute of Health and Welfare 43 Future work in disease expenditure Estimating disease expenditure for financial year Linkage to epidemiological data in the forthcoming 2003 burden of disease data base

Australian Institute of Health and Welfare 44 Future work in disease expenditure Source of funds (Australian Government/State government/private) estimates will be made

Australian Institute of Health and Welfare 45 Publications are downloadable from web e/index.cfm

Australian Institute of Health and Welfare 46 Finis Thank you