6th meeting of Health Accounts Experts and

correspondents for health expenditure data 30 September 2004

Atkinson Review of Measurement of Government Output and Productivity for the

UK National Accounts

Phillip Lee, Atkinson Review

- The connection

- UK experience

- The Atkinson review

- The way forward

National Accounts

Public Services

National Accounts• GDP includes value of public services

– How to measure?• Outputs = inputs: assumes no productivity growth• Measure outputs directly (since 1998 in UK; Eurostat

requirement from 2006)– What outputs?– What has happened to productivity?

ONS Programme of Introducing Direct Output Measures 1998-

Function Spendingin 2000

Whenintroduced

Main components of existingoutput indicator

Health 30.3% 1998 DH Cost-weighted activity index

Education 17.1% 1998 Pupil numbers with 0.25%quality adjustment

Social protection - socialsecurity administration

2.7% 1998 Number of benefit claims for 12largest benefits

Public order and safety -prisons, courts andprobation

3.0% 2000 Number of prisoner nights,number of court cases and cost-weighted activity index forprobation.

Public order and safety -Fire

1.1% 2001 Number of fires attended ofdifferent types, other specialservices.

Social protection -personal social services

7.4% 2001 Number of adults and children incare. Number of hours of homehelp.

Government productivity estimates implied by UK National Accounts (2000=100)

90.0

95.0

100.0

105.0

110.0

115.0

1995 1996 1997 1998 1999 2000 2001 2002

Inputs Outputs Productivity

Public Services (UK)

• Count – spending– units of resource (hospital beds, nurses)– units of activity (operations, nursery school places)

• Set targets and minimum standards – maximum waiting times– % children vaccinated– reducing mortality from suicide

• [match to text]

Public Services (UK) cont’d

• minimum standards, inspections, star ratings, league tables

• better information for patients, choice

• better complaints systems, patient advocacy, user involvement, devolved management

• emphasis on outcomes not process or activity

But what are the outputs?

• More work needed on concepts and data

Atkinson Review:set up by Len Cook, National Statistician

Terms of Reference To advance methodologies for the measurement of government output, productivity and

associated price indices in the context of the National Accounts, recognising:– the full scope of government outputs– differences in the nature and quality of these outputs over time– the relationship between government outputs and social outcomes– the need for comparability with measures Tof private sector services outputs and

costs– the existing work of the ONS– the appropriate measurement of inputs, including quality and the distinction

between resource and capital, so that, together with the measurement of output, light can be thrown on developments in government productivity

Atkinson Review Interim Report, July 2004

Measurement of government output, and of inputs and productivity, should be based on a set of principles, within the framework set by international guidelines.

Principles

• Output should be measured by incremental contribution to individual or collective welfare i.e. the added value by service concerned.

• Start from services provided, and seek indicators that give full coverage.

• Value should be seen as adjusted for quality.

• Formal criteria should be established for extending direct output measures to further services.

• Measures should cover the whole of the UK.

Output

Principles

• Measures of inputs should be as comprehensive as possible, and should include capital services

• Consideration should be given to the split between current and capital spending.

• Criteria should be established for price deflators applied to input spending series.

• Independent corroborative evidence should be sought on government productivity, as part of a process of “triangulation”.

Inputs and Productivity

Progress Report on Health

• improved measures of health output introduced into National Accounts June 2004;

• consider using same cost weights for substitutable treatments (Nicola Mai);

• further work needed to improve output measures to take account of quality/outcomes - York research (Andy Street);

• better data sources needed to measure outputs of GP services (Hugh Gravelle);

• improve data sources for proper UK coverage;

• ONS to publish health productivity article.

Changes to Health Output Measures June 2004• Cost weighted activity index 1998 - 2004: all hospital

inpatient episodes had common cost weight;• DH developments gave access to hospital reference

costs: match volume and costs for c.1000 activities;• Wider coverage e.g. NHS Direct, more detail on GP

prescribing - latest year total 1700 categories; • Better method as more richness in measuring changing

mix of activities; • But can make a case for using adjusted cost weights -

Nicola Mai;

• New numbers published as part of National Accounts in June 2004: annual rate of change in government health output 3% 1995 -2003 rather than 2% on previous method.

To follow:• health productivity article using National Accounts

figures for health outputs and deflated inputs, plus discussion of interpretation - ‘triangulation’.

• Problem: current ‘outputs’ take no account of quality of ‘activity’ - health gain, patient experience, reinfection, convenience and timeliness of access…