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 Study of Living Standards (CSLS) Improving Measures of Health Care Output and Outcomes in Canada Canadian 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.

3 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?

5 Real and Nominal Health Expenditures in Canada as Shares of Total Economy GDP,

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

7 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 Source: Statistics Canada Table

8 Employment in the Health Care and Social Assistance Industry in Canada, (average annual growth rates) Source: Statistics Canada Labour Force Survey

9 Nominal Output in the Health Care and Social Assistance Industry in Canada, (average annual growth rates) Source: Statistics Canada National Accounts

10 Deflators for the Health Care and Social Assistance Industry in Canada, Source: Calculated by the CSLS based on figures from the Statistics Canada National Accounts

11 Real Output in the Health Care and Social Assistance Industry in Canada, (average annual growth rates, 1997 dollars) Source: Statistics Canada National Accounts

12 Health Care and Social Assistance Industry Deflator in Canada, Source: Calculated by the CSLS based on the Statistics Canada National Accounts

13 Real and Nominal Output of the Health Care and Social Assistance Industry in Canada as a Percentage of Total Output, Source: Calculated by the CSLS based on the Statistics Canada National Accounts

14 Real GDP per Worker in the Health Care and Social Assistance Industry in Canada, (average annual growth rates) Source: Calculated by the CSLS based on the Statistics Canada National Accounts and Labour Force Survey

15 Real GDP per Worker in the Health Care and Social Assistance Industry as a Percentage of the All Industry Average in Canada, Source: Calculated by the CSLS based on the Statistics Canada National Accounts and Labour Force Survey

16 Official Statistics Canada Productivity Estimates in the Health Care (excluding hospitals) and Social Assistance Industry in Canada, (average annual growth rates) Source: Statistics Canada CANSIM Table

17 Mortality Rate per 100,000 by Selected Causes in Canada, Source: Statistics Canada, Vital Statistics, Death Database, and Demography Division (population estimates) CANSIM Tables and

18 Health Outcomes in Canada, Source: CANSIM “Health Indicators” vol. 2007(1). Catalogue no XIE

19 Health Outcomes, Health Productivity and Health Output Per Capita in Canada, Source: Statistics Canada, Vital Statistics, Death Database, Demography Division Tables and ; CSLS calculations based on Statistics Canada LFS and National Accounts