Benchmarking of productivity in the Nordic countries

Jon Magnussen

Nordic Case Mix Conference

Helsinki 2010

Contributors

Denmark – Kim Rose Olsen– Anette Søberg Rød– Jes Søgaard– Anni Ankjær-Jensen– Janni Kilsmark

Finland)– Unto Häkkinen– Miika Linna– Mikko Peltola– Timo Seppälä– Kirsi Vitikainen

Norway – Jon Magnussen– Sverre Kittelsen– Kjersti Hernæs– Kjartan S Anthun

Sweden – Clas Rehnberg – Emma Medin

Nordic model - similarities

• Common goals and aspirations– Equity– Public participation

• Common structural features– Tax based funding– Decentralization – the role of regions,

counties and municipalities– (Local) Political governance

But: Differences in health policy

• Governance

• Financing and contracting

• Choice and rights

• There is a common model but we differ in how we approach important issues

Decentralization

Nursing/home care

Primaryhealth

Specialisedhealth

Finland Municipality Municipality (Municipality)

Sweden Municipality Counties Counties

Denmark Municipality Regions Regions

Norway Municipality Municipality Regions

Financing

• Sweden and Finland both use DRGs but have local variations– Finland mostly (?) for budgetary purposes– Sweden partly for budgetary purpose, partly

for activity based financing

• Geographical resource allocation less of an issue

Financing

• Norway have used DRGs in activity based financing since 1997

• Denmark introduced DRGs as a marginal payment in 1999, but have increased the use to cover 50 % of income in 2007

• Centrally initiated uniform models for the whole country

Norway ABF – an illustration

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1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20??

Our approach

• Productivity analysis on hospital level data• Two separate analysis

– 1999-2004; Norwegian hospital reform– 2005-2007; Specialised health care in Norway

• Data Envelopment Analysis (DEA) with Farrell technical productivity

• Bootstrapping to test differences and estimate confidence intervals

• Second stage analysis:– Reform effects– Financing models– Structural factors

Data envelopment analysis (DEA) method

a) Feasability

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c) Convexity

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d) Minimum extrapolation

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Production model

• Outputs 1999-2004:– DRG-weighted Inpatients in 3 groups

• Medical, Surgical, Others

– DRG-weighted Day care patients in 2 groups• Medical, Surgical

– Number of Outpatients

• Outputs 2005-2007:– DRG-weighted inpatients– DRG-weighted day care– Number of outpatients

Challenges

• Finland/Sweden – specialty discharge rather than hospital discharge

• Denmark – DK-DRG

• Day care – and outpatient visits

Production model

• Inputs:– Operating costs in real value– Problems:

• Comparability of price level for hospital inputs, variation across hospitals and remaining variation across countries

• Consistent removal of capital costs?• Consistent removal of costs associated with research,

teaching, psychiatric care etc etc

• Aggregation problem– Sweden and Norway cannot always use hospital level

data– Scale interpretations are problematic,

Productivity/CRS model used

DRG-weights

• 1999-2004:– Common Nordic weights as (weighted) average of

NO/Fin/Swe cost weights

• 2005-2007:– Norwegian weights– Aggregate weights for complicated/uncomplicated– Separate (calibrated) Danish weights

• Ideally: Patient level data grouped – so far not possible

Input price deflator (wages and GDP)

0.500

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Danmark

Finland

Sverige

Norge

Results 1999-2004

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0.55

0.6

0.65

0.7

0.75

0.8

0.85

0.9

1999 2000 2001 2002 2003 2004

Danmark Sverige Finland NorgeSeries5 Series6 Series7 Series8Series9 Series10 Series11 Series12

2nd stage

• Reform has increased productivity level by approx 4 %

• Robust to different specifications• And:

– Changes in Activity based financing (ABF) has no effect (?)

– Changes in case-mix has no effect– Length of stay (LOS) longer than expected (within

each DRG) is associated with lower productivity (severity or inefficiency)

Results 2005-2007

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2005 2006 2007

Finland Sweden Denmark Norway

Salterdiagram

Second stage analysis

• Country• Year• Region• Teaching hospital• Case-mix index• Length of stay deviation• Share of outpatient activity• Size

Summary of results

• Significant higher levels of productivity in Finland– Small differences between Norge, Sverige og

Danmark– Large intra country variations

• Diseconomies of scale?– Could be case-mix– Careful interpretation because different definitions of

units

• Other explanatory variables – not significant– Thus LOS deviation, no longer different

Speculation

• Same result in three different analyes of Norway and Finland (1999, 1999-2004, 2005-2007)

• Same result in two analyses of Norway/Sweden (1999-2004, 2005-2007)

• Why?– Personnell mix?– Level of personnell– Capitalization?– Case-mix– Different institutional setting?

The way forward

• Using patient level data to provide a common grouping of patients

• Harmonizing measurement of day care and outpatient activity

• Cost weights – or possibly more disaggregated analysis

• Micro level analysis to understand differences• A larger dataset to be able to test second stage

variables