Jack E' Triplett

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WHY ECONOMISTS NEED MEDICAL OUTCOME MEASURES TO
ESTIMATE MEDICAL CARE PRODUCTIVITY

• Jack E. Triplett
• Brookings Institution and
• National Institute of Economic and Social
  Research
• NIESR Workshop
• March 2-3, 2003

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FIXING SOME PRELIMINARY CONCEPTS
MULTIFACTOR PRODUCTIVITY (MFP) (AGGREGATION
OF ALL OUTPUTS OF A SECTOR) / (AGGREGATION OF
ALL INPUTS TO THAT SECTOR) Q / (KLEMS) ?
MFP RATIO OF INDEX NUMBERS FOR OUTPUTS AND
INPUTS
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MFP INDEX NUMBERS MUST HAVE APPROPRIATE ECONOMIC
PROPERTIES

• FISHER INDEX
• TORNQVIST INDEX
• WALSH INDEX

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MEDICAL CARE INPUTS KLEMS GREAT DIFFICULTIES
MEASURING K, L, M, AND PROBABLY S K HIGH
TECH CAPITAL (NOT JUST ICT) L SIGNIFICANT
HUMAN CAPITAL M HIGH TECH SUPPLIES, SUCH AS
PHARMACEUTICALS, STENTS S SOME HUMAN
CAPITAL, AND LIKELY SOME EMBEDDED HIGH TECH
SUPPLIES GOOD NEWS E PRESENTS NO UNIQUE
PROBLEMS!
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FOR MEDICAL CARE, GREAT DIFFICULTY MEASURING
OUTPUTLONG HISTORY

• STIGLER COMMITTEE REPORT 1961
• SCITOVSKY, 1964, 1967
• FUCHS, 1969, REDER, 1969
• FELDSTEIN, 1971
• ALL SORTS OF MEDICAL ECONOMICS TEXTBOOKS

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IN U.S. OUTPUT VIA STANDARD NATIONAL ACCOUNTS
DEFLATION METHODOLOGY USING FISHER INDEX
METHOD AS AN EXAMPLE FISHER OUTPUT INDEX
CHANGE IN EXPENDITURE FISHER PRICE
INDEX F(Q)01 ( ? Q1P1 / ? Q0P0 ) /
(F(P)01) FISHER PRICE INDEX (F(P)01)
L(P)01 P(P)01 ½ AND LASPEYRES PRICE INDEX
L(P)01 ? P1i Q0i / ? P0i Q0i NB P(P)01
defined analogously
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L(P)01 ? P1i Q0i / ? P0i Q0i THE REAL
ISSUE WHAT ARE THOSE i COMPONENTS? HOW DO
WE DEFINE THE COMPONENTS OF THE MEDICAL OUTPUT
INDEX OR MEDICAL PRICE INDEX? WHAT IS THE
APPROPRIATE ANALOGY TO, E.G., APPLES AND ORANGES
IN THE CPI?
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COST OF DISEASE APPROACH

• FORM PRICE INDEX FROM COST OF TREATING DISEASE
• SCITOVSKY 1964, 1967 (APPENDICITIS, CHILDS EAR
  ACHE)
• CUTLER, ET AL. 1998, 99, 01 (HEART ATTACK, OR
  AMI)
• FRANK, BERNDT AND S. BUSCH 1999, 2001 (MAJOR
  DEPRESSION)
• FRANK, BERNDT, AND A. BUSCH, 2003 (SCHIZOPHRENIA)
• CUTLER AND XX (STROKE)
• CUTLER AND MEARA, 1999 (PREMATURE INFANT)
• CUTLER AND ZZ (BREAST CANCER)
• SHAPIRO AND WILCOX, 1996, S., SHAPIRO AND W. 2001
  (CATARACTS)
• COCKBURN AND ANIS, 2001 (ARTHRITIS)
• U.S. PPI FOR HOSPITALS (SAMPLE DRGS IDC-9,
• HOLD DIAGNOSIS AND PATIENT CHARACTERISTICS OR
  SEVERITY CONSTANT)

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ALTERNATIVE TO US APPROACH
ESTIMATE QUANTITY INDEX DIRECTLY F(Q)01
L(Q)01 P(Q)01 ½ WHERE L(Q)01 ? P0i Q1i
/ ? P0i Q0i NB P(P)01 defined
analogously COMPONENTS, THE is, DEFINED AS
DISEASES, PER ICD-9
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CALCULATING FORMULA L (Q)01 S (Q1 / Q0)
W0 WHERE W0i Q0i P0i / S Q0i P0i
SHARE OF DISEASE i IN TOTAL DATA NEEDED
QUANTITIES OF TREATMENTS SHARES FOR
WEIGHTS NB SHARES OF WHAT?
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MATRIX OF HYPOTHETICAL HEALTH CARE
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RETURN TO QUESTION SHARES OF WHAT? FOR
PRODUCTIVITY, NOT PRICES REFER BACK TO TABLE
AND EQUATION PARTICULARLY IF PRICES ARE NOT
MEANINGFUL!!
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L (Q)01 S (Q1 / Q0) W0 WHERE W0i Q0i C0i /
S Q0i C0i SHARE OF DISEASE i
(TREATMENT i) IN TOTAL COST FOR PRODUCTIVITY,
WEIGHT QUANTITIES BY COST SHARES FOR TREATMENTS
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COSTS
FOR COST-EFFECTIVENESS MEASURES, NEED FULL
COSTS FOR PRODUCTIVITY OF HEALTH CARE SECTOR,
NEED HEALTH CARE SECTOR COSTS LOWEST LEVEL OF
AGGREGATION FOR WHICH THEY ARE AVAILABLE FOR
NHS IDEAL TREATMENTS WITHIN IDC-9 GROUPINGS
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MEDICAL OUTCOME OR EFFECTIVENESS MEASURES NEEDED
FOR QUALITY ADJUSTMENT WHEN NEW TREATMENTS ARE
INTRODUCED QALY USED IN RATIO FORM REFERRING TO
TABLE QALY (C) / QALY (B) DO NOT NORMALLY NEED
VALUATIONS BUT MAY GO OUTSIDE NATIONAL ACCOUNTS
PRODUCTION BOUNDARY
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OPTIONAL WHY NOT REGRESS HEALTH ON RESOURCES
PUT INTO MEDICAL CARE? ANSWER CANT CONTROL
FOR NONMEDICAL DETERMINANTS OF HEALTH STATUS