Measuring Medical Care Productivity: A Proposal for U.S. National Health Accounts

MEASURING productivity is a central challenge in medical care, as it is in all other service indus­ tries. Medical care is particularly important, however, because of the enormous share of gross domestic prod­ uct (GDP) that it takes. The United States spent $2 tril­ lion dollars, or 16 percent of GDP, on health care in 2005 (Catlin, et al. 2007). This compares with a me­ dian of 8.5 percent among other Organisation for Eco­ nomic Co-operation and Development countries. Further, the productivity of U.S. health care is suspect. While some studies have suggested that productivity growth is reasonable in aggregate (Cutler and McClel­ lan 2001; Cutler, Rosen, and Vijan 2006), others argue that there is substantial waste at the margin (Fisher et al. 2003). If we are to understand and improve the pro­ ductivity of our health care spending, a more system­ atic approach to tracking productivity in the health care sector is needed. This article discusses a proposed framework for measuring productivity in medical care via the cre­ ation and use of national health accounts. Such ac­ counts would provide a comprehensive picture of population health in relation to health care spending within an integrated framework in which consistent definitions, measurement tools, and analytic conven­ tions are used.