HealthcareCOSTS andPERFORMANCEin the OECD

Adapted from Presentation to Economics for Public Management – Expenses classUniversity of Toronto, June 2009

Presented by Alex Rascanu alexandru.rascanu@utoronto.ca

www.rascanu.com

Healthcare Expense= consumption of health goods and services + capital investment in healthcare infrastructure

Good HealthDetermined by : a. Bio-medical, lifestyle and socio-economic factorsb. Level of healthcare resources available

Key driver of a population’s productivity and consequent economic growth

OECDaimed at international cooperation for better economic and social policies; 30 industrialized countries are members

AGENDA

2. Performance-Related Goals in OECD

1. Costs in OECD

3. Costs & Performance in OECD

PART 1: OECD Countries Healthcare Costs

Expenditure on healthAs a percentage of GDP, 2006 (i.e. latest available year)

Data: OECD Health Data 2008 (June 2008).

Turke

y

United Kingdom

Australia

OECD average

Canada

Switz

erland

United St

ates

0

2

4

6

8

10

12

14

16

18

Public Private

5.7%

8.4% 8.7% 8.9%10%

11.3%

15.3%

Health care costs across the OECD: expected to increase each year until 2050 by 2 to 4 % of GDP

International Comparison of Spending on Health, 1980–2006

Average spending on healthper capita ($US PPP)

Total expenditures on healthas % of GDP

Data: OECD Health Data 2008 (June 2008).

1990: USA was the only country that spent more than 10% of their GDP on health goods and services2000: 4 countries were spending that much on health goods and services2006: The number has risen to 6 countries.

Turke

y

United Kingdom

OECD average

Australia

Canada

Switz

erland

United St

ates

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

7000.0

Public Private

OECD Expenditure on healthPer capita ($US PPP), 2006

$591

$2760 $2824 $2999

$3678

$4311

$6714

Data: OECD Health Data 2008 (June 2008).

Canada’s expense on healthcare was 20% larger than the OECD average.

OECD Out-of-Pocket Health Care Spendingper Capita, 2006

Adjusted for Differences in the Cost of Living

Data: OECD Health Data 2008 (June 2008).

Switzerland USA Australia Canada OECD average$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$857

$546 $532$483

$1,305

Out-of-pocket citizens’ healthcare spending is another relevant consideration. Swiss citizens pay on average 50% more than the

Americas and 150% more than the Canadians.

2. Cost control

1. Access to services

3. Efficiency

4. Effectiveness

PART 2: OECD Countries Healthcare System Performance-Related Goals

- Provide healthcare insurance coverage- Ensure timely service availability

Easier to control spending in countries with single-payer systems or national health services

Very difficult to measure efficiency, but availability of cross-national data helps.

Reduce errors in delivery, increase workforce’s technical skills,better meet the expectations of patients and consumers.

PART 3: Healthcare Systems Cost and Performance: Canada, Australia and USA

Country Life expec-tancy

Infant Mortali-ty Rate

Physicians per 1000 people

Nurses per 1000 people

Per capita expendi-ture on health (USD)

Healthcare costs as a percent of GDP

% of govern-ment revenue spent on health

% of health costs paid by government

Australia

81.1 4.7 2.8 9.7 2,999 8.8 17.7 67.0

Canada 80.4 5.4 2.1 8.8 3,678 10.0 16.7 70.0

US A 77.8 6.9 2.4 10.5 6,714 15.3 18.5 46.0

WHO healthcare systems ranking: Canada #30, Australia #32, USA #37. Main challenges in Canada’s healthcare system: i. wait times (“This is a country in which dogs can get a hip replacement in under a week and in which humans wait two to three years” –Dr. quoted in NYT);

ii. medical professionals shortage (1 less doctor per thousand people as compared to OECD average, 1.1 less nurses per thousand people as compared to OECD average)

Magnetic Resonance Imaging (MRI) Unitsper Million Population, 2006

Data: OECD Health Data 2008 (June 2008).

Australia Canada OECD average Switzerland USA0

5

10

15

20

25

30

In recent years there has been rapid growth in the availability of diagnostic technologies such as MRI units. The number of MRIs

used in Canada has increased to 6.2 per million population, but is still lagging behind the OECD average of 10.2.

Life Expectancy at Birth, 2006

Data: OECD Health Data 2008 (June 2008).

Years

USA OECD average Canada Australia Switzerland0

10

20

30

40

50

60

70

80

90

Female Male

80.475.2

82.377.1

82.778

83.578.7

84.279.2

Large gains in life expectancy over the past decades, due to improvements in living conditions, public health interventions and

progress in medical care. In 2005, life expectancy at birth in Canada was 1 ½ year higher than the OECD average.

Conclusion

There is some positive correlation between public healthcare costs and subsequent performance, but citizens’ health is also heavily influenced by lifestyle and socio-economic factors.

Thank you!

Alex Rascanu alexandru.rascanu@utoronto.ca

www.rascanu.com

Bibliography1. Organization for Economic Cooperation an. (2009). OECD Health Data 2008. How does

Canada Compare. Retrieved June 7, 2009 from OECD website: www.oecd.org/health/healthdata

2. Docteur, E. (June 2003). Reforming Health Systems in OECD Countries. Presentation given during OECD Breakfast Series in Partnership with NABE, Washington, DC.

3. The Canadian Press (2008, November 13). Health-care spending to reach $5,170 per person. CTV (Toronto, ON). Retrieved on June 9, 2009 from http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20081113/healthcare_inflation_081113/20081113?hub=Canada

4. Anderson, G. F. & Markovich, P. (November 2008). Multinational Comparisonsof Health Systems Data, 2008. Study released by the Commonwealth Fund, New York, NY.

5. Wilkie, J., & Young, A. (2009). Why health matters for economic performance. Australian Treasury Economic Roundup. 3(1). 57-72. Retrieved June 10, 2009, from http://www.treasury.gov.au/documents/1496/PDF/05_Why_health_matters.pdf

6. Organization for Economic Cooperation an. (2009). OECD Factbook 2009. Health Expenditure, 220-221.

7. About OECD. (n.d). Retrieved June 9, 2009 from OECD website: http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html

8. Docteur, E. (January 2004). More value for money: Improving efficiency in OECD health systems. Presentation given during conference Health Systems - Approaching the Future, Berlin, Germany.

Bibliography

Appendix: Part 1

OECD Countries Expenditure on healthAs a percentage of GDP, 2006 (i.e. latest available year)

Turke

yKorea

Czech Rep

...

Irelan

dJap

an

Hungary

United K...

Norway Ita

ly

Icelan

d

Netherl

...

Denmark

Canad

a

Portuga

l

France

United St

... 0

2

4

6

8

10

12

14

16Public Private

Data: OECD Health Data 2008 (June 2008).

Case: Waiting times for elective surgery

Waiting times reported by those needing elective surgery in 2001

AUS CAN US ____________________________Less than 1 month 51% 37% 63%

1 to less than 4 months 26 36 32

4 months or more 23 27 5

SOURCE: Blendon et al. 2002

Appendix: Part 2

Improving efficiency in OECD health systems

Within OECD: very large cross-country variation in resources, activity and health system performance

Reforms Required: - Demand-side reforms- Supply-side reforms- Structural reforms

Highest spending and activity levels do not always translate into best results (e.g. health-care outcomes, waiting times, patient and consumer satisfaction, equitable access to care)

Appendix: Part 3 - Personal Remarks

Personal Remarks: Concluding Thoughts on Healthcare Costs and Performance in the OECD

• Systems could benefit from move away from blunt costcontainment instruments to more sophisticated approaches that take quality, outcomes, and value into account• Increasing efficiency may require some additional, targeted investments (e.g., in information systems or management Improvements)• Important to adopt an evidence-based approach– Evidence-based medicine– Evidence-based policy making