Framework for International Comparisons of Volume and Prices in Health Care

1. A framework for international comparisons of volume and prices in health care Interim Report Manfred Huber 7th Meeting of HA Experts and Correspondents for Health Expenditure Data

2. Overview of presentation • Objectives of the project of health specific PPPs (H-PPPs) • Expenditure classifications for price comparisons • Potential data sources: Where are we? What’s missing? • Aggregation strategies for multilateral comparisons • Which role for quality adjustment? • Conclusions & Next steps

3. The project of price and volume comparisons: objectives • Set of comparative indicators at different levels of aggregation (ICHA-HC [three]/two/one digit level) • Indicators for bilateral comparisons • Simple comparisons of volume measures with unweighted OECD averages • But also aggregation to Indicators for multilateral comparisons.. • ..for Improved purchasing power parities for health (H-PPPs) (“health-specific” PPPs)

4. Basic definitions (SNA terminology) • Expenditure = price x volume • Value: synonym to “expenditure” • Quantity: units for homogenous, individual goods or services • Volume: weighted average of quantities of individual products or groups of products • Output: volume of well-defined bundle of goods

5. Expenditure classifications for price comparisons: ICHA

6. Expenditure classifications for price comparisons: ICHA (cont)

7. Four estimation methods and their data requirements

8. Method of choice ? • Unit prices for market services (in particular for medical goods) • Indirect comparison for non-market services via output measures from (secondary) administrative data sources  suggested for the H-PPP project • Input price method for non-market services (Eurostat-OECD, 2002 PPPs) • But: non-market/market distinction in SHA-based health accounts not available.. • ..and what about expenditure corresponding to transaction prices for mixed public-private payment (cost-sharing)?

9. Expenditure classification: ICHA modified

10. Which are the “shortcuts” used for health in current PPPs?

11. Current specification of health in PPPs • Detailed list of market prices for medical goods and selected ambulatory/outpatient services (~540 of which 85% are pharmaceuticals • Advantages: questionnaire with very detailed specifications, tested in the field • Potential to complement list of ambulatory services (e.g. put in more services which correspond to current/latest technology; more expensive treatment) • E.g. complement unit-prices for long-term care

12. Example of detailed specification: pharmaceutical

13. Example of detailed specification: home care

14. Example of detailed specification: dental care

15. How to improve PPPs and move to H-PPPs? • Focus on “comparative resistant” item of hospital care • Big spending item, not covered well in current PPPs • Select inpatient care items: high spending items; dynamic spending development (ageing/chronic conditions); e.g. surgery like: hip/knee replacement • Complement ambulatory care list with high volume surgical procedures (cataract etc.) • Further develop indicators for long-term care

16. Potential data sources • Use of secondary data sources: survey too costly? • Design hospital data set with a view to provide relevant data for H-PPP purposes • Same for long-term care • Health care quality indicators project: many indicators refer to volumes (often measuring times, “right thing is done”) • Co-operate with main PPPs project to improve available items in questionnaire and for quality checking?

17. Calculation and aggregation: standard methods of linking countries Complete system of bilateral comparisons Comparison of four countries with a multilateral average Source: Hill (2002) Linking Countries and Regions using Chaining Methods and Spanning Trees

18. Linking countries with (minimum) spanning trees Examples of spanning trees Source: Hill (2002) Linking Countries and Regions using Chaining Methods and Spanning Trees

19. Example of spanning tree Source: Hill (2002) Linking Countries and Regions using Chaining Methods and Spanning Trees

20. Which role for quality adjustment? • Quality differences important issue that needs to be addressed • Direct adjustment versus post-adjustment/analysis? • Suggestion to keep volume/output/quality separate for the first phases of the project • Later on, test regression models before “adjustments” can be justified • Hedonic regression technique for PPPs available, but seldom used so far; should be tested once more data available

21. Conclusions and next steps • Project of H-PPPs major undertaking, potentially resource intensive • Better linking of SHA to SNA becomes a concern • Synergy with overall PPP project? • Break project down in manageable parts • Get countries involved in bilateral comparisons to improve quality, commitment and save cost? • Need to write down the math on index formulas to be tested and do first tests with hospital data

22. Points for discussion • Comments on conceptual framework • Data availability and feasiblity from national sources • Interest to participate in further methodological work and work with test data