Comparisons of hospital output in Canada: national and international perspectives
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Comparisons of hospital output in Canada: national and international perspectives Ruolz Ariste1 · Kam Yu2
Received: 3 May 2016 / Accepted: 6 May 2017 © Springer Science+Business Media New York 2017
Abstract Current cost-based approach in measuring health care output does not allow decomposition of health care expenditure into price and output components. In this paper we propose an episode-based direction measurement method which closely resembles the concept of output in the system of national accounts. Using data from the Canadian Institute for Health Information, we calculate a quality unadjusted output index of the Canadian hospital sector for the periods 1996–2005. The result shows that total output increases at an average annual growth rate of 1.49%. We expect that with the quality adjustment the actual rate is higher. This is in contrast with the long-held assumption that health care productivity growth is zero. Our results provide key information on the ongoing health care policy debate. Keywords Health care output · System of national accounts · Price index · Quantity index JEL Classification C43 · I12
Introduction Health care expenditures have gained increasing attention by policy makers in Canada and other industrialized countries because of their rising trends, both in dollar values and as percentages of national incomes. In Canada, provincial governments, which are responsible for the funding of the single-payer systems, have implemented various cost-control policy to “bend the cost curve” in health care. Depending on institutional and economic factors in
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Kam Yu [email protected] Ruolz Ariste [email protected]
1
Canadian Institute for Health Information, 495 Richmond Road, Suite 600, Ottawa, ON K2A 4H6, Canada
2
Department of Economics, Lakehead University, 955 Oliver Road, Thunder Bay, ON P7B 5E1, Canada
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R. Ariste, K. Yu Table 1 Health expenditures in G7 countries, 2012. Source: OECD Health Data 2007 and WHO (2015) Country
% of GDP
% Publicly funded
Expenditure per person (US$)
AAGRa 1990–2012 (%)
Canada
10.9
70.1
5763
3.9
France
11.6
77.4
4644
3.4
Germany
2.5
11.3
76.7
4717
Italy
9.2
77.3
3114
1.0
Japan
10.3
82.1
4787
5.5
9.3
84.0
3595
4.5
17.0
47.0
8845
3.7
U.K. U.S.A.
a Average annual growth rate
Spending on Health Care as % GDP, 2012 U.S.A. France Germany Canada Japan U.K. Italy 0
5
10 Public
15
20
private
Source: WHO (2015)
Fig. 1 Health expenditure components in G7 countries, 2012
each province, they have employed policy tools such as market incentive, input cost control, efficiency improvement, hard budget cap, etc. (Marchildon and Di Matteo 2015). Discussions, however, focus mainly on total expenditure of the health care section. Total expenditure is an important statistic simply because in most countries, where a large part of health care services is provided or funded by the public sector, it has the largest share in government budgets. There is some concern that rising costs could put some strain in public finance. Table 1 sh
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