Productivity critical to sustain health care

Posted on January 9, 2011 in Health Debates

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Sunday, January 9, 2011.   By Glen Roberts, Special To Qmi Agency

There is no shortage of issues in health care. Over the past two decades, many have attracted attention from health leaders, policy-makers and the media alike.

In 2010, health-care spending is expected to top $191.6 billion in Canada, representing 11.7% of our national gross domestic product. Canada is one of the highest health-care spenders among the Organization for Economic Co-operation and Development countries. Health expenditures now represent more than 40% of provincial and territorial spending.

Maintaining our health-care system worries many, especially in light of our aging population. While Canada’s aging population is often cited as one of the biggest threats, research has consistently shown the effect of aging on the overall health-care expenditures is relatively small compared to the impact of inflation.

I suggest health inflation should be our focus, at least in the short term and here’s why. While the general rate of inflation is Canada is about 2%, health-care costs have increased annually anywhere between 25% to 35% faster than the general rate of inflation – about 2.5% to 2.7%. We can offset these inflationary costs if we increased the productivity within the health-care system.

Productivity is a function of how quickly and how well we do things. In classic economic terms, productivity is defined as the input required delivering a specific output. In health care, the units of input and output are difficult to measure.

For example, input could be measured as the number of patients seen or the money invested into a system. Output in essence is the outcome from health care interventions singularly or collectively.

Productivity is not only relevant but also critical to sustaining Canada’s health-care system. To get serious about understanding the cost pressures and outcomes of the health-care delivery system, productivity measures must become a central theme in the leadership and management of the system.

The difficulty is there is almost no information on the outcomes from health care interventions in Canada – and this must change. We are seeing this happen in other countries such as the United Kingdom and it is Canada’s turn to step up to the proverbial plate.

It’s been shown a small 1.5% productivity improvement per year could make the Canadian health-care system sustainable over the next 25 years. This is well within our reach and at a new think-tank at the University of Western Ontario, we are making understanding inflation and productivity within the health-care system one of our priorities.

The think-tank – Canadian Policy Network, or CPNet@Western – is located at the university’s faculty of social science. I see CPNet as a “think and do” centre with the goal of bringing together the best research in the areas of health, education and the environment so it can be turned into the best public policy.

We’ll work with researchers at Western and elsewhere to uncover, through intensive research and analysis, the determinants of health inflation. This knowledge will help create more informed policy and better decisions.

There is a need for clarity of language, better analysis and improved understanding of the underlying forces and factors that cause health-care inflation to grow at this rapid rate. Only then can we create strategies and policies to deal with the biggest causes that are driving up the cost of health care.

As we embark on a new year, it’s time for a new focus. At CPNet@Western, health inflation and productivity will be ours. Here is to a healthier health system in 2011.

Glen Roberts is executive director of Canadian Policy Network at the University of Western Ontario.

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