Global Health-Care Productivity

There are enormous variations in per capita health care spending both across countries, and within countries.  Few would disagree that raising levels of spending in the poorest countries is an international imperative.   But increasing spending alone will not solve the problems of health care delivery.  In this presentation, I present evidence on the elusive link between health care spending and health care outcomes, a phenomenon best explained by differences in the productivity of health care systems.  Some health care systems, whether in developed or developing countries, deliver high quality care at modest cost.  Other systems are costly and do a poor job of improving health, with measures of waste – including both excess spending and lost lives – exceeding 50% of current expenditures.  The challenges to improving productivity come along three dimensions. The first is the difficulty of measuring both risk-adjusted costs and risk-adjusted health “value added.”   The second is how economic incentives can be aligned to reward actual – rather than poorly measured – improvements in productivity.  And the third is to better understand, and more importantly to influence the organizational structure and ethos of health care institutions – whether physician-owned hospitals in McAllen, Texas or rural health clinics in Indonesia.