1. Measuring health output and productivity in the UK: an essential element of public accountability UK Centre for the Measurement of Government Activity Phillip Lee, James Hemingway & Christopher Little OECD/ONS/Govt of Norway Workshop, London, 3 October 2006

2. Outline UK National Health Service Output – data & methodology Input – data & methodology Output & productivity estimates Current work

3. UK National Health Service Public services in UK account for ~20% total GDP NHS largest public service: 30% final govt consumption Health expenditure in UK (2005): –£88 billion (public); £13 billion (private) England (82%), Scotland (10%), Wales (5%), Northern Ireland (3%) Separate activity & financial data collection

4. Output, Input & Productivity Productivity = (Output volume)/(Input volume) Require output & input measures on same basis Output – Cost-weighted activity index (Laspeyres) Input – Expenditure deflated for price/salary increases

5. Volume of Health Output – Methodology Data available from England & NI – proxy for UK England –1900 activity types –81% coverage by expenditure (2005) Northern Ireland –1500 activity types –79% coverage by expenditure (2005)

6. Volume of Health Output – Activity Data Secondary Care (Hospitals) – Episodes of treatment (FCEs), classified by diagnosis/procedure (DRG-like scheme) Outpatients – number of appointments by specialty Community healthcare – number of appointments by specialty Primary Care (General Practice) – number of appointments Dentists, Optometrists – number of appointments Ambulance services – emergency journeys by specialty NHS Direct phone/internet services, walk-in centres – number of activities Prescription drugs – number of prescriptions

7. Volume of Health Output – National Accounts Index 1999 = 100 Average growth: +3.2 per cent a year

8. Volume of Health Input – Methodology Resources used in the production of NHS activities Labour (e.g. medical, administrative staff) Procurement (e.g. drugs, electricity) Capital (e.g. buildings, equipment) Convert to volume measures by removing changes in pay & prices over time (deflators)

9. Volume of Health Input – Methodology 2 Detailed expenditure & deflators for Labour & Procurement are England only Calculate aggregate deflator for Labour & Procurement for England as proxy for UK Apply to current price UK expenditure figures to get volume Labour & Procurement input Add to UK volume of input measure for Capital

10. Volume of Health Input – Estimates Experimental options lead to a range of input estimates: Labour –Counts of staff hours (direct) –Deflated staff costs (indirect) Capital –User costs (capital services) –Depreciation (capital consumption) Procurement –Alternative deflators for prescription drugs

11. Volume of Health Input Highest growth: +4.6 per cent a year Indirect labour, Paasche drugs deflator, Capital services Index 1999 = 100 Lowest growth: +3.9 per cent a year Direct labour, NIC drugs deflator, Capital consumption

12. Health Productivity – Estimates Productivity = (Output volume)/(Input volume) National Accounts output volume series With/without experimental adjustments to output volume for quality Range of experimental input volumes

13. Index 1999 = 100 Including quality adjustments: +5% Without quality adjustments: +3.8% Volume of Health Output – With & Without Quality Adjustments

14. Index 1999 = 100 Lowest inputs growth -0.9% pa Highest inputs growth -1.5% pa Productivity – Without Quality Adjustments

15. Index 1999 = 100 Lowest inputs growth +0.2% pa Highest inputs growth -0.5% pa Productivity – With Quality Adjustments

16. Current Work More accurate measures of primary care Improved data & methodology for hospital activity Better input volume measures Wider UK coverage Public consultation –Quality adjustments –Value of health adjustment

17. Summary UK health output series based on direct measurement Comprehensive, but improving with wider geographic & activity coverage Experimental quality adjustments to output Advanced measure of productivity being developed Includes experimental ‘direct’ measures of labour and capital

18. Contact christopher.little@ons.gsi.gov.uk