Akiko Maeda, Ph.D. Lead Health Specialist The World Bank Europe and Central Asia Region

1. Relating microeconomic efficiency with macro-level productivity of the health care sector in the EU Context Akiko Maeda, Ph.D. Lead Health Specialist The World Bank Europe and Central Asia Region

2. Presentation Outline • Overview • Defining “product” and “productivity” in health system • Measurement tools and performance standards • Critical role of health information systems • Relevance in the EU Context

3. Relating microeconomic efficiency with macroeconomic productivity in the health sector: • Health care is a significant and growing segment of the economy (7 to 14% of GDP in industrialized countries) • Involves highly complex interactions among inputs, outputs and outcomes

4. Health, Health System and Growth Macroeconomic Growth Improved Health Outcomes Health System Productivity

8. OECD Health Spending & Health Outcomes, 1998

10. Revenues /Inputs • Redistribution (Equity) • Administrative Efficiency • Risk-pooling/ Insurance • Health Services Throughputs • Allocative Efficiency • Technical efficiency • Efficacy/ Effectiveness • Health Outcomes • Aggregate • Disease specific • Socio-economic factors Measuring Health Systems Performance: inputs, throughputs and outcomes Critical performance indicators needed at all levels

11. Complex Nature of Health Care System • Transformation of Health Care • from a “cottage industry” comprising individual practitioners • to a highly professionalized and technologically intensive service “industry” • with rapidly evolving production and technological frontiers

12. Health care “production” process... • Multiple input factors • Complex production process • Complex production settings • Complex interaction with the environment • Complex definition of products, outcomes and benefits

13. Challenges to measuring health system performance • Many areas of uncertainty in productivity due to: • Lack of data • Lack of consistent and comparable data • Difficulty in relating financial inputs with production outputs and health outcomes • Difficulty in adjusting for quality, external factors

14. Challenges in measuring productivity in health care: • Establishing common standards and definitions for: “Products”, Production processes • Relating these to Cost, Quality and Cost-effectiveness • What measurement tools are available?

15. SOCIO-ECONOMIC CONTEXT Structure and Context of Health Care “Production” System.. Health Outcomes (e.g. QALYs) Health Care Production Setting managed care, gate- keeping functions, continuity of care,... Social services, Environ- mental policies, Other inter- sectoral programs Health Care Services clinical practice drugs, medical technology, HRD Public Health Programs, Health Promotion R&D, Investments

16. Structure and Context of Health Care “Production” System.. SOCIO-ECONOMIC CONTEXT Health Outcomes (e.g. QALYs) Health Care Production Setting managed care, gate- keeping functions, continuity of care,... Social services, Environ- mental policies, Other inter- sectoral programs Health Care Services clinical practice drugs, medical technology, HRD Public Health Programs, Health Promotion R&D, Investments

17. Standards and regulation of health system inputs

18. Performance Measurement: Tools and Instruments • Evidence-Based Medicine: Health Technology Assessment • evaluating efficacy, cost-effectiveness & appropriateness • assessment of multiple inputs • Potential value in defining a bundle of effective health interventions (personal and public health) • Still in early stages of development

19. U.S. Medicare Australian DRGs Croatian PPTP Accounting for production process DRGS (Version 4.1) Coronary Bypass with Coronary Invasive Cardiac Investig. Bypass 106 F05A Procedure with catastrophic with PTCA 1 CC / Coronary Bypass with Coronary Invasive Cardiac Investig. Bypass with 107 F05B Procedure without cardiac Catastrophic CC catheterization Coronary Bypass Surgery Coronary Bypass without Other cardio Invasive Cardiac Investig. 108 thoracic F06A Procedure with Catastrophic procedures or Severe CC Coronary Bypass without Coronary Invasive Cardiac Investig. Bypass 109 F06B Procedure without without cardiac Catastrophic or Severe CC Catheterization Note: 1. CC = complicating condition s . Source: Croatia Health Finance Study, 2003, The World Bank

21. SOCIO-ECONOMIC CONTEXT Structure and Context of Health Care “Production” System.. Health Outcomes (e.g. QALYs) Health Care Production Setting managed care, gate- keeping functions, continuity of care,... Social services, Environ- mental policies, Other inter- sectoral programs Health Care Services clinical practice drugs, medical technology, HRD Public Health Programs, Health Promotion R&D, Investments

22. Variety of production categories and settings • Categories of personal care • Acute care • Intensive care • Rehabilitative care • Palliative care • Outpatient (specialist) clinical care • Primary care (general practice) • How to bundle production processes?

23. Evaluating productivity under different health care organizational settings • Mixed results on the impact of organizational reforms in US in the 1990s: • Vertical and horizontal integration • Non-profit vs for-profit • European experience: • “Internal markets”, separation of provider/payer functions • Decentralization & corporatization

24. SOCIO-ECONOMIC CONTEXT Structure and Context of Health Care “Production” System.. Health Outcomes (e.g. QALYs) Health Care Production Setting managed care, gate- keeping functions, continuity of care,... Social services, Environ- mental policies, Other inter- sectoral programs Health Care Services clinical practice drugs, medical technology, HRD Public Health Programs, Health Promotion FLOW OF FUNDS R&D, Investments

25. Relating production to financing and costs • System of Health Accounts offers: • Comprehensive and consistent definition of “core” health care activities, boundaries • International classification on sources and uses of health resources • Comparable description of the flow of funds from sources to uses • Is it sufficient to describe financial flows for productivity measures?

26. Health System Performance Evaluation Process Analysis of Outputs, outcomes and Expenditures NHA framework on resource flows Utilization and Quality Reviews Clinical and epidemiological outcomes HTA, Cost-effectiveness Analysis Evidence-Based Medicine Service benchmarks Provider level Population groups

27. Revenues /Inputs • Redistribution (Equity) • Administrative Efficiency • Risk-pooling/ Insurance • Health Services Throughputs • Allocative Efficiency • Technical efficiency • Efficacy/ Effectiveness • Health Outcomes • Aggregate • Disease specific • Socio-economic factors Measuring Health Systems Performance A comprehensive Health Management Information System needed to track critical performance indicators at all levels

28. patients Descriptive Operational heath data common data & functions resources activities classifications authorisations Statistic Structure of an integrated health management information system Health Care Management: daily operational support Clinical venues Insurer/payer Claims processing Utilization & quality reviews Health policy, strategic planning, regulation Patients, public Public health Reporting, surveillance, statistics Life-time patient record, analyses Public information, education, etc. Source: Adapted from Leo P. Vollebregt, EHTEL

29. European e-Health Initiatives: Potential Applications • Public health statistics, reporting & surveillance • Beneficiary management for insurers/payers • Eligibility checking, claims processing, utilization & quality reviews/ medical audits • Health care management • Health policy, management and planning • Patient Lifetime Health Records

30. Opportunities created by EU Integration • E-Europe 2005 objectives • European Wide e-Health Insurance Card • Regional Health Information Networks (broadband) connecting all Health Actors • Online Health Services : e-Health Record, tele-consultation, e-medication, e-reimbursement (across national borders) • Introduction of Health Information Clearinghouse concept: public or private entity that facilitates processing of nonstandard health data into standard data elements

31. Information standards motivated by EU e-Health initiatives • HISA Health Information Systems Architecture CEN – TC251 European Standards Centre • Specific Middleware Architecture open to all kinds of standards: HL7, IP, XML, Java • Effective strategy for dealing with Legacy Health Systems • Standard categories and definitions • EU regulation on patient confidentiality, privacy, security

32. Impact of EU Integration and Expansion... • Need for common information standards for health insurers/ purchasing agencies • Need for transparency, comparability on quality of care, cost structures • Need for security, privacy, patient confidentiality

33. Impact of EU Integration and Expansion... • Potential consolidation of providers and insurers seeking: • Economies of scale and scope • Lower cost structures • Higher quality

34. Impact of EU Integration and Expansion... • Movement of goods, services and people across borders • Pharmaceuticals and medical devices • Health professionals • Harmonization of regulation • Research and Development

35. Look for lessons from US Health Insurance Portability and Accountability Act (HIPAA), 1996 • To improve portability & continuity of health insurance coverage in group & individual markets • All entities covered by CMS (formerly HCFA) must be in compliance with electronic transactions and code sets standards (by Oct 16, 2003)

36. Conclusion • Many positive developments in measurement tools, but will require strategic coordination among different domains to obtain meaningful results in aggregate • Development of a comprehensive strategy for health management information system is critical • EU integration offers opportunities and motivation for finding common standards, strategies