Measuring productivity is always more challenging than it might appear. The concept is simple to state – it’s the relationship between inputs and outputs. But identifying all the inputs and outputs is not always easy, nor is actually measuring them. One of the more challenging areas is any healthcare system. There are many different reasons for this, but a major one is the extent to which any medical intervention has long term outcomes. For example, hospital A may treat 10% more patients for a particular medical problem than an identical hospital B. But if 50% of hospital A’s patients require further medical intervention five years later, and only 5% of the hospital B’s patients require this, then B is clearly more productive.
This is a particular problem in the US since their Affordable Care Act funds Medicare provision on the basis of the sector’s productivity performance. Using data from the U.S. Bureau of Labor Statistics, it seems that productivity in the sector is falling, and hence funding will go down. But researchers from USC have found that adjusting the data by taking into account the relative severity of patients’ illness and the quality of outcomes, productivity has risen. More details can be found in this article on the Modern Healthcare website.