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Benchmarking of productivity in the Nordic countries

Benchmarking of productivity in the Nordic countries. Jon Magnussen Nordic Case Mix Conference Helsinki 2010. Denmark Kim Rose Olsen Anette Søberg Rød Jes Søgaard Anni Ankjær-Jensen Janni Kilsmark Finland ) Unto Häkkinen Miika Linna Mikko Peltola Timo Seppälä Kirsi Vitikainen.

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Benchmarking of productivity in the Nordic countries

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  1. Benchmarking of productivity in the Nordic countries Jon Magnussen Nordic Case Mix Conference Helsinki 2010

  2. Denmark Kim Rose Olsen Anette Søberg Rød Jes Søgaard Anni Ankjær-Jensen Janni Kilsmark Finland) Unto Häkkinen Miika Linna Mikko Peltola Timo Seppälä Kirsi Vitikainen Norway Jon Magnussen Sverre Kittelsen Kjersti Hernæs Kjartan S Anthun Sweden Clas Rehnberg Emma Medin Contributors

  3. Nordic model - similarities • Common goals and aspirations • Equity • Public participation • Common structural features • Tax based funding • Decentralization – the role of regions, counties and municipalities • (Local) Political governance

  4. But: Differences in health policy • Governance • Financing and contracting • Choice and rights • There is a common model but we differ in how we approach important issues

  5. Decentralization

  6. Financing • Sweden and Finland both use DRGs but have local variations • Finland mostly (?) for budgetary purposes • Sweden partly for budgetary purpose, partly for activity based financing • Geographical resource allocation less of an issue

  7. Financing • Norway have used DRGs in activity based financing since 1997 • Denmark introduced DRGs as a marginal payment in 1999, but have increased the use to cover 50 % of income in 2007 • Centrally initiated uniform models for the whole country

  8. Norway ABF – an illustration

  9. Our approach • Productivity analysis on hospital level data • Two separate analysis • 1999-2004; Norwegian hospital reform • 2005-2007; Specialised health care in Norway • Data Envelopment Analysis (DEA) with Farrell technical productivity • Bootstrapping to test differences and estimate confidence intervals • Second stage analysis: • Reform effects • Financing models • Structural factors

  10. Data envelopment analysis (DEA) method y y + + + + + + + + + + + + + + + + + + + + + + + + + + x x a) Feasability b) Free Disposal y y + + + + + + + + + + + + + + + + + + + + + + + + + + x x c) Convexity d) Minimum extrapolation

  11. Production model • Outputs 1999-2004: • DRG-weighted Inpatients in 3 groups • Medical, Surgical, Others • DRG-weighted Day care patients in 2 groups • Medical, Surgical • Number of Outpatients • Outputs 2005-2007: • DRG-weighted inpatients • DRG-weighted day care • Number of outpatients

  12. Challenges • Finland/Sweden – specialty discharge rather than hospital discharge • Denmark – DK-DRG • Day care – and outpatient visits

  13. Production model • Inputs: • Operating costs in real value • Problems: • Comparability of price level for hospital inputs, variation across hospitals and remaining variation across countries • Consistent removal of capital costs? • Consistent removal of costs associated with research, teaching, psychiatric care etc etc • Aggregation problem • Sweden and Norway cannot always use hospital level data • Scale interpretations are problematic, Productivity/CRS model used

  14. DRG-weights • 1999-2004: • Common Nordic weights as (weighted) average of NO/Fin/Swe cost weights • 2005-2007: • Norwegian weights • Aggregate weights for complicated/uncomplicated • Separate (calibrated) Danish weights • Ideally: Patient level data grouped – so far not possible

  15. Input price deflator (wages and GDP)

  16. Results 1999-2004

  17. 2nd stage • Reform has increased productivity level by approx 4 % • Robust to different specifications • And: • Changes in Activity based financing (ABF) has no effect (?) • Changes in case-mix has no effect • Length of stay (LOS) longer than expected (within each DRG) is associated with lower productivity (severity or inefficiency)

  18. Results 2005-2007

  19. Salterdiagram

  20. Second stage analysis • Country • Year • Region • Teaching hospital • Case-mix index • Length of stay deviation • Share of outpatient activity • Size

  21. Summary of results • Significant higher levels of productivity in Finland • Small differences between Norge, Sverige og Danmark • Large intra country variations • Diseconomies of scale? • Could be case-mix • Careful interpretation because different definitions of units • Other explanatory variables – not significant • Thus LOS deviation, no longer different

  22. Speculation • Same result in three different analyes of Norway and Finland (1999, 1999-2004, 2005-2007) • Same result in two analyses of Norway/Sweden (1999-2004, 2005-2007) • Why? • Personnell mix? • Level of personnell • Capitalization? • Case-mix • Different institutional setting?

  23. The way forward • Using patient level data to provide a common grouping of patients • Harmonizing measurement of day care and outpatient activity • Cost weights – or possibly more disaggregated analysis • Micro level analysis to understand differences • A larger dataset to be able to test second stage variables

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