Comparisons of hospital output in Canada: national and international perspectives

Current cost-based approach in measuring health care output does not allow decomposition of health care expenditure into price and output components. In this paper we propose an episode-based direction measurement method which closely resembles the concept of output in the system of national accounts. Using data from the Canadian Institute for Health Information, we calculate a quality unadjusted output index of the Canadian hospital sector for the periods 1996-2005. The result shows that total output increases at an average annual growth rate of 1.49%. We expect that with the quality adjustment the actual rate is higher. This is in contrast with the long-held assumption that health care productivity growth is zero. Our results provide key information on the ongoing health care policy debate.