Productivity measures are useful to assess the performance and efficiency of resource use. The ABS currently compiles multifactor productivity estimates for market sector industries but not for non-market sector industries such as health care.¹ Non-market sector industries have a large portion of output provided at prices that are not economically significant; that is, where goods and services are provided to final consumers at prices below the cost of provision, such as public hospital services.
Given the importance of non-market industries to the Australian economy, the ABS has a research agenda to address this gap in productivity statistics. This paper presents experimental estimates of multifactor productivity for hospitals, a sub-division of the health and social assistance industry.
The estimates show that between 2008-09 and 2018-19, hospital labour productivity grew on average 0.5% per annum. Increased use of intermediate inputs per hour worked contributed about 0.3 percentage points per annum. The average annual growth rate of multifactor productivity was 0.1%. Labour input was a main driver for output growth, contributing about 1.8 percentage point to annual growth of 3.5% in output. This reflects that hospital output is labour intensive.
It is important to note that these estimates do not reflect the impact of COVID-19, as the analytical timespan ends at 2018-19. However, the methodology used in this paper will reveal medium to long term impacts of COVID-19 on hospital output and productivity when data becomes available.
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 Industries considered to be non-market for the purposes of productivity statistics are Divisions O (Public Administration and Safety), P (Education and Training), and Q (Health Care and Social Assistance) of Australian and New Zealand Standard Industrial Classification (ANZSIC).