Measuring the Output of Health in the United StatesWorkshop on Measurement of Non-Market Output in Education and Health

Michael S. ChristianU.S. Bureau of Economic Analysis

October 4, 2006

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Two Projects in Health Economics

Home and volunteer production

Direct volume measurement

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Direct Volume Measurement

Real health care services measured in U.S. GDP accounts by price deflation CPI, PPI, input price indexes Based on prices of procedures

Direct volume measurement is an interesting alternative

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Inpatient Hospital Services (1)

Volume of inpatient hospital services Simple count of discharges Fisher index of discharges by condition Fisher index adjusted by survival rate

Measuring by condition measures some cost savings as price decreases Substitution to less expensive

procedures

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Inpatient Hospital Services (2)

Survival rate adjustment adapted from Dawson et al (2006)

Two sources on volume, survival rates Nationwide Inpatient Sample (NIS)

National Hospital Discharge Survey (NHDS)

Fisher weights are mean charges by condition from NIS

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Inpatient Hospital Services (3)

Annual volume growth, 1993-2003

NIS NHDS

Simple count 1.1% 1.2%

Fisher index 1.3% 1.6%

Survival adjustment 2.1% 2.5%

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NIS Inpatient Discharges

95

100

105

110

115

120

125

130

1993 1995 1997 1999 2001 2003

Survival adjusted

Fisher index

Simple count

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NHDS Inpatient Discharges

95

100

105

110

115

120

125

130

1993 1995 1997 1999 2001 2003

Survival adjusted

Fisher index

Simple count

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Aggregate Survival Adjustment

95

100

105

110

115

1993 1995 1997 1999 2001 2003

NIS

NHDS

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Inpatient Hospital Services (4)

Large effects from survival adjustment

Indexes only account for cost-saving substitutions within inpatient services Ignores potentially important

substitutions across service categories Aizcorbe and Nestoriak (2006)