By Qinghuan Luo, Economic Research Section


Health care plays a central role in the lives and well-being of Australians, and is a large and growing share of the Australian economy. Accurate measurement of health care output and productivity is important for policy makers and researchers to gain insights into key drivers for health spending growth, and how health care contributes to growth of the Australian economy. Rapid advances in medical technology and innovation generally lead to improved outcomes, e.g. new, less invasive procedures or more effective drugs. This poses particular challenges in measuring changes in output price and volume which take into account impacts of improvement in health care quality. Measurement of health care output is further complicated by a lack of market prices for much of the output, as a large proportion of health care in Australia is in the non-market sector.

As part of the ongoing development work on enhancing output measures for health care, the ABS aims to derive improved output volume measures that capture quality changes including those reflected in a shift or substitution across different types of treatments or different care settings. Fully accounting for quality changes, especially for those linked to treatment outcomes, requires patient level data that contain information on treatment outcome. Such data are generally not available. It is more feasible to construct partial disease based output measures which can take into account some aspects of such shift or substitution. The improved output measures can be used for deriving productivity estimates.

This paper focuses on constructing disease based output measures for hospital services in Australia, as part of the development work outlined in the recent discussion paper on enhancing health care output measure. Hospital services are an important area of the health care industry due to its large share of overall health expenditure. There is a strong interest in hospital measures in relation to the efficiency and productivity of this sector, as public hospital spending comprises a large proportion of governments overall spending. It is more feasible to construct a disease based output measure for hospitals than for other areas of the health industry, as hospital administrative data with clinical information are routinely collected by state/territory health authorities and these data can be potentially used for measuring hospital output. However, as episode level data are not readily available, this study focused on the use of aggregated data that are more easily accessible and suitable for regular production of statistics.

This paper presents the results of quantity indexes constructed for hospital output on a disease basis using the Australian Institute of Health and Welfare (AIHW) summary statistics of hospital admitted patient care expenditure.

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