The 'Healthcare Costs And Performance in the OECD' presentation was initially given to the University of Toronto class of Economics for Public Management – Expenses, in June 2009. For more information on the author: http://www.rascanu.com http://www.twitter.com/alexrascanu

1. Healthcare COSTSand PERFORMANCE in the OECD Adapted from Presentation to Economics for Public Management – Expenses class University of Toronto, June 2009 Presented by Alex Rascanu alexandru.rascanu@utoronto.ca www.rascanu.com

2. Healthcare Expense =consumption of health goods and services +capital investment in healthcare infrastructure Good Health Determined by : a. Bio-medical, lifestyle and socio-economic factors b. Level of healthcare resources available Key driver of a population’s productivity and consequent economic growth

3. OECD aimed at international cooperation forbetter economic and social policies; 30 industrialized countries aremembers

4. AGENDA 1. Costs in OECD 2. Performance-Related Goals in OECD 3. Costs & Performance in OECD

5. PART 1: OECD Countries Healthcare Costs Expenditure on health As a percentage of GDP, 2006 (i.e. latest available year) 15.3% 11.3% 10% 8.7% 8.9% 8.4% 5.7% Health care costs across the OECD: expected to increase each year until 2050 by 2 to 4 % of GDP Data: OECD Health Data 2008 (June 2008).

6. International Comparison of Spending on Health, 1980–2006 Average spending on healthper capita ($US PPP) Total expenditures on healthas % of GDP 1990: USA was the only country that spent more than 10% of their GDP on health goods and services 2000: 4 countries were spending that much on health goods and services 2006: The number has risen to 6 countries. Data: OECD Health Data 2008 (June 2008).

7. OECD Expenditure on health Per capita ($US PPP), 2006 $6714 $4311 $3678 $2999 $2824 $2760 $591 Canada’s expense on healthcare was 20% larger than the OECD average. Data: OECD Health Data 2008 (June 2008).

8. OECD Out-of-Pocket Health Care Spendingper Capita, 2006Adjusted for Differences in the Cost of Living $1,305 Out-of-pocket citizens’ healthcare spending is another relevant consideration. Swiss citizens pay on average 50% more than the Americas and 150% more than the Canadians. Data: OECD Health Data 2008 (June 2008).

9. PART 2: OECD Countries Healthcare System Performance-Related Goals 1. Access to services - Provide healthcare insurance coverage - Ensure timely service availability 2. Cost control Easier to control spending in countries with single-payer systems or national health services 3. Efficiency Very difficult to measure efficiency, but availability of cross-national data helps. 4. Effectiveness Reduce errors in delivery, increase workforce’s technical skills, better meet the expectations of patients and consumers.

10. PART 3: Healthcare Systems Cost and Performance: Canada, Australia and USA WHO healthcare systems ranking: Canada #30, Australia #32, USA #37. Main challenges in Canada’s healthcare system: i. wait times (“This is a country in which dogs can get a hip replacement in under a week and in which humans wait two to three years” –Dr. quoted in NYT); ii. medical professionals shortage (1 less doctor per thousand people as compared to OECD average, 1.1 less nurses per thousand people as compared to OECD average)

11. Magnetic Resonance Imaging (MRI) Unitsper Million Population, 2006 In recent years there has been rapid growth in the availability of diagnostic technologies such as MRI units. The number of MRIs used in Canada has increased to 6.2 per million population, but is still lagging behind the OECD average of 10.2. Data: OECD Health Data 2008 (June 2008).

12. Life Expectancy at Birth, 2006 Years 83.5 84.2 82.3 82.7 79.2 80.4 78 78.7 77.1 75.2 Large gains in life expectancy over the past decades, due to improvements in living conditions, public health interventions and progress in medical care. In 2005, life expectancy at birth in Canada was 1 ½ year higher than the OECD average. Data: OECD Health Data 2008 (June 2008).

13. Conclusion There is some positive correlation between public healthcare costs and subsequent performance, but citizens’ health is also heavily influenced by lifestyle and socio-economic factors.

14. Thank you! Alex Rascanu alexandru.rascanu@utoronto.ca www.rascanu.com

15. Bibliography Organization for Economic Cooperation an. (2009). OECD Health Data 2008. How does Canada Compare. Retrieved June 7, 2009 from OECD website: www.oecd.org/health/healthdata Docteur, E. (June 2003). Reforming Health Systems in OECD Countries. Presentation given during OECD Breakfast Series in Partnership with NABE, Washington, DC. The Canadian Press (2008, November 13). Health-care spending to reach $5,170 per person. CTV (Toronto, ON). Retrieved on June 9, 2009 from http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20081113/healthcare_inflation_081113/20081113?hub=Canada Anderson, G. F. & Markovich, P. (November 2008). Multinational Comparisonsof Health Systems Data, 2008. Study released by the Commonwealth Fund, New York, NY. 5. Wilkie, J., & Young, A. (2009). Why health matters for economic performance. Australian Treasury Economic Roundup. 3(1). 57-72. Retrieved June 10, 2009, from http://www.treasury.gov.au/documents/1496/PDF/05_Why_health_matters.pdf

16. 6. Organization for Economic Cooperation an. (2009). OECD Factbook 2009. Health Expenditure, 220-221. 7. About OECD. (n.d). Retrieved June 9, 2009 from OECD website: http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html 8. Docteur, E. (January 2004). More value for money: Improving efficiency in OECD health systems. Presentation given during conference Health Systems - Approaching the Future, Berlin, Germany. Bibliography

17. Appendix: Part 1 OECD Countries Expenditure on health As a percentage of GDP, 2006 (i.e. latest available year) Data: OECD Health Data 2008 (June 2008).

18. Appendix: Part 2 Case: Waiting times for elective surgery Waiting times reported by those needing elective surgery in 2001 AUS CAN US ____________________________ Less than 1 month 51% 37% 63% 1 to less than 4 months 26 36 32 4 months or more 23 27 5 SOURCE: Blendon et al. 2002

19. Appendix: Part 3 - Personal Remarks Improving efficiency in OECD health systems Within OECD: very large cross-country variation in resources, activity and health system performance Highest spending and activity levels do not always translate into best results(e.g. health-care outcomes, waiting times, patient and consumer satisfaction, equitable access to care) Reforms Required: - Demand-side reforms - Supply-side reforms - Structural reforms

20. Personal Remarks: Concluding Thoughts on Healthcare Costs and Performance in the OECD Systems could benefit from move away from blunt cost containment instruments to more sophisticated approaches that take quality, outcomes, and value into account Increasing efficiency may require some additional, targeted investments (e.g., in information systems or management Improvements) Important to adopt an evidence-based approach – Evidence-based medicine – Evidence-based policy making