Measurement of nonmarket output in education and health

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Measurement of non-market output in education
and health

• The Portuguese experience estimation of the
  output of hospitals according to different
  methodologies

HEALTH ACCOUNTS
London, October 3-5, 2006
Health Accounts Working Group Portugal
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- The Health Accounts are compiled according to
the same rules and methodology of the National
Accounts.- This means that when a unit is
market the output is measured through its health
sales and when the unit is non-market is measured
by its sum of costs of production. - This study
covers only the Hospitals that are part of the
National Health Service.
Introduction - Present situation
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In the end of 2002 the Government restructured
the NHS as a starting point 31 hospitals changed
its legal status to corporations with limited
liabilities. In 2005 the legal status was changed
again to a new legal figure (EPE) and 5 new units
joined this group. Nonetheless both hospitals EPE
and the remaning public ones are part of the
NHS.-In 2003 onwards the recording of the
output is a mixed one the output of public ones,
still non-market, is valued as the sum of costs
and the ouptu of the hospitals EPE, nowm market,
is measured as the sum of health sales.- In
2003 the new Public Accounting Plan for Health
comes into force. This means that until 2002 data
for all hospitals are on a cash basis and in 2003
onwards data are on accrual basis.
Introduction - Present situation
4
- Until 2002, the payments by IGIF (unit
responsible for the financial mangement of the
financing of the NHS) were made to finance the
cost and therefore recorded as transfers.
Therefore the amount recorded as payment for
health services correspond to payments made by
other health schemes and private insurance for
services rendered to their beneficairies.- In
2003 onwards IGIF has contracts with the
hospitals. IGIF buys a certain amount of health
services and this amount is recorded under sales
of these hospitals.
Introduction - Present situation
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- To apply different methodologies for measuring
output in order to understand how changes can not
be directly related with political restructuring
that do not affect the activity, except those
resulting from merging, splitting, creation or
disappearance of units. The sustainability of
public expenditure in health is under evaluation
for the recent years and therefore the output of
the hospitals should be measured in a correct
way.
Purpose of the work
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The volume indicators used are not
quality-adjusted. There is the consensus on what
quality is and which should be used. The
output of the hospitals was broken-down by the
main functions of the services provided by the
hospitals in Portugal - In-patient - Day
hospital - Out-patient - Home care.
Description of the work
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The methods for measure the output that were
used are 4- Method A it measures the units as
non-market. The health output is measured as the
sum of costs of production less non-health
sales. Health output ()
Compensations of employees (D1) ()
Intermediate Consumption (P2) ()
Consumption of Fixed Capital (k1) () Other
taxes on production (D29) (-) Other
subsidies on production (D39) (-) Non-healt
h sales
Description of the work
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- Method B it corresponds to the sales of health
care services of the hospitals. - Method C
Corresponds to the present situation, that is,
how output is recorded in the Health Accounts for
the period 2000-2004. It can be considered as a
mixed recording at least for 2003 and 2004. For
the period 2000-2002, all units are recorded as
being non-market and therefore its output is
measured by the sum of costs of production. In
2003 and 2004, as previously mentioned, the
hospitals EPE became market and their output was
measured by the sales of health services whereas
the hospitals SPA (public institutions) remained
non-market with its output measured by the sum of
costs of production.
Description of the work
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- Method D Output is equal to the quantities
multiplied by its price or average cost. The
quantities can be Diagnosis Related Groups
(DRGs) and the respective price or average cost.
It can also be number of treatments or
appointments multiplied by its price or average
cost. In-patient Prices fixed legally by type
X DRG (Diagnosis Related Groups) by
typeHospital Day Cases Total average cost by
type X Patients treated by type of
treatmentOut-patientSpecialised Medicine
appointments total average cost by specialised
medicine X nº appointments by specialised
medicineEmergency Total average cost by type X
Patients treated by type of treatmentAmbulatory
surgery Prices fixed legally by type X DRG
(Diagnosis Related Groups) by type.Home care
Total average cost by type X nº of visits by
type
Description of the work
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Price and volume Indices were calculated to
measure real growth also by using detailed data
on quantities and prices/costs. To calculate
output figures valued at prices of previous year,
Paasche Price Indices were calculated in order to
consider weighters of the current year and to
measure volume Laspeyeres Quantity Indices were
calculated. The health output was deflated
for all Methods according to the output deflator
used in method D. The volume indices obtained
from the data in Methods A, B and C were
implicitly derived. For the period 2000-2002
detailed financial statements for the hospitals
in the NHS were used to estimate output according
to Methods A, B and C, both for production costs
and health and non-health sales. Data for these
years are on a cash basis. In 2003 the new
Public Accounting Plan came into force including
the availability of cost accounting. Therefore
the calculation of output according to Methods A,
B and C for 2003 and 2004 considered the detailed
cost accounting for the hospitals on an accrual
basis.
Description of the work
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Results
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Health Output
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Health Output
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Health Output
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Health Output-Breakdown by functions
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Health Output-Breakdown by functions
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Health Output-Breakdown by functions
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Health Output-Breakdown by functions
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• Conclusions
• The volume indicators that were used are not
  quality adjusted due to its complexity. We think
  that presently no consolidated methodology is
  established to allow the calculation of quality
  indicators.
• As a conclusion from the available data we think
  that Method D seems to be the best measurement of
  health output because it is more stable and it is
  not influenced by externalities such as those
  mentioned in the first paragraph of this section.
  This Method describes in a better way the volume
  growth of the health output making it easier to
  study the factors that are responsible for
  changes in productivity.
• Should Method D be applied the only limitation
  rely on the estimation of the non-health output
  which is part of both questionnaire on Health
  Accounts and National Accounts. There is a need
  to consistent with the National Accounts.