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Measuring health care output in the UK: a diagnosis based approach
Exploring a different way of calculating UK health care output in real terms in the presence of innovation and treatment substitution.
Author: Nicola Mai
Economic Trends, no 610, pp 64-73. ISSN: 0013-0400
This article proposes a way of calculating health care output growth in real terms in the presence of innovation and treatment substitution. The methodology derives from the large US literature on health care price indices, applying some of the principles to UK data. A point of departure is the adaptation of the price index methods to volume data.
This article argues that the proposed methodology would better measure innovation and treatment substitution. This is explored using an empirical study on coronary heart disease, an area where innovation in treatment is significant. The article shows measured health care output growth is sensitive to using a common cost weight for substitutable treatments. The paper also includes suggestions for further work.
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