I have often said that in my next life, in addition to training to be a cardiac surgeon ( yes, I certainly would do it all over again, gladly) I would also train to be a Certified Public Accountant and get a Ph.D in statistics. The accountant expertise would allow me to read a spreadsheet on budgets so I could figure out where all the money has gone, particularly in the hospitals I worked at, and the statistics angle would enable me to understand articles such as the one from the Economist that I have reprinted here.Since Britain has pumped more money into the Nstional Health Service in the past few years, the issue becomes whether the folks in the NHS wisely used the money to improve the productivity of the system. How to do that? Well, where there is an algoithm. there is a way. In fact several ways, depending on the algorithm. So you can wind up with a graph like this:
If you read the entire article, reprinted from the March 2nd, 2006 Economist, you will see how the Office for National Statistics are playing this one, something for everyone. What it does do is to point out the difficulties of assessing productivity in medicine, as oposed to doing it in industry, yet everyday we find some politician suggesting that medicine is a business, or a commodity, and shuld be treated as such. And so it goes.
Health-service productivity
Take your pick
Mar 2nd 2006
From The Economist print edition
New official estimates are confusing and misconceived
DURING the past seven years, public money has been poured into the
National Health Service. Whether or not the NHS has used the deluge
of cash productively is a politically charged question that matters
hugely to taxpayers and patients. People rightly expect the Office for
National Statistics (ONS) to provide a reliable and trustworthy answer.
On February 27th, the ONS served up not one but six answers (see
chart). For those of a sunny disposition, NHS productivity—the ratio of
health-service output to inputs—rose by 1.6% a year from 1999 to
2004. For those inclined to look on the dark side, it fell by 1.5% a
year over the same period. And for those who shun extremes, the
ONS had four other variants on offer: annual rises of 0.9% and 0.2%
and yearly falls of 0.5% and 0.9%.
As with music and love, so with official numbers and productivity: an
excess of them may cause the appetite to sicken and die. However,
the ONS says the surfeit of figures is needed after a report in 2005
on measuring public-service output and productivity. That review, in
which a team of government officials was led by Sir Tony Atkinson of
Oxford University, called for far-reaching changes in methods.
At present, the official measure of NHS output published in the national accounts is based on the number of treatment activities, with more expensive ones being given a higher weight than cheaper ones. It is this estimate that produces yearly declines of 0.9% or 1.5% in productivity, depending upon how inputs are calculated.
However, the Atkinson review said that output should take into account quality. If, say, the number of hospital operations is static but they are becoming clinically more effective, that quality gain should bhigher output. Incorporating a range of quality adjustments (all positive) suggested by the Department ofHealth, produces a 0.2% annual rise in productivity or a 0.5% yearly fall.
The Atkinson review also argued that the output of public services like health and education becomes more valuable as the economy grows. The worth of an educational grade and the value of health rise in line with real earnings, it suggested. Unsurprisingly, the department also advocates applying this principle. Since trend earnings growth is 1.5% a year, it results in the most upbeat of all the productivity figures. Together with the quality adjustments, it gives annual rises of 1.6% or 0.9%.
With its plethora of answers, the ONS report is certainly confusing. A further weakness is that it has accepted the department's output estimates without questioning them. Yet the department's tendentious methods are open to challenge. For example, the main source of the quality boost to productivity comes from statins, drugs used to lower cholesterol. The department calculates that their benefit to patients is much higher than their cost to the health service. This higher valuation is then used to re-weight statins' contribution to output, which in turn pushes up NHS productivity growth by 0.8 percentage points a year. But as the department itself acknowledges, arguably this gain should be credited to the pharmaceutical industry rather than the NHS. The notion that public-service output becomes more valuable in a growing economy is also contentious.
François Lequiller, head of national accounts at the OECD, says the principle is “new for national accountants”. He adds that the majority would prefer to keep it on the research agenda for the time being. Academic experts are blunter. Barbara Fraumeni, former chief economist at the Bureau of Economic Analysis (BEA), which draws up America's national accounts, says she doesn't think the principle is a good one. Jack Triplett, also a former BEA chief economist, says that it muddles up price and quantity. The trend increase in the value of health is being driven by rising demand. “The fact that people are willing to pay more for health care doesn't say anything about the quantity that is being provided,” he says.
The ONS is treading on dangerous ground. Britain's crime figures have lost credibility because of conflicting official numbers. Publishing confusing measures of NHS productivity, when there is grave doubt whether the underlying methods are sound, is likely to undermine public faith in official statistics still further.