Health spending for OECD countries is estimated to more than triple by 2020 to $10 trillion.1 This is against a background where ‘per capita health spending has increased by more than 80% in real terms between 1990 and 2005, outpacing the 37% rise in gross domestic product per head’.2

But does greater expenditure bring better results in terms of healthcare outcomes? Although in the US healthcare spending equates to some 15% GDP,3 the US has come bottom in a ranking of 19 leading industrialised nations for deaths in those aged under 75 for conditions potentially preventable by timely and efficient healthcare.4 Latest data on healthy life expectancy at birth in the US is 67 years for males; 71 for females.5 In Singapore, healthy life expectancy at birth is reported to be the same for women and better for men (69 years – men; 71 years – women), yet health spending stands at under 4% GDP.6

During 2008, ACCA hosted an international series of three invitation-only round tables, bringing together senior health professionals, policymakers and leading academics in Singapore, Washington DC and in London, to debate some of the key issues surrounding the relationship between public health expenditure and health outcomes. Chaired by ACCA Council member and chair of ACCA’s International Public Sector Committee, Dean Westcott, the round tables fostered discussion that highlighted key knowledge gaps and as such informed ACCA’s subsequent international call for a research project that would develop understanding of the future role(s) for the accounting profession in helping to meet these challenges.

Earlier this year, ACCA was pleased to announce the successful applicant whose project, Accounting for Good Health, will address some of the questions for applied research identified by our round table participants.

Accounting for good health

Roger Hay, Oxford Policy Institute
There is considerable evidence that additional income is more important for better health than expenditure on healthcare, particularly at low levels of income (the ‘Preston curve’). Nonetheless, there are also significant variations in health outcomes, as measured by Infant Mortality Rates and longevity, between countries and social groups at the same level of national (and personal) income. Moreover, Andrews (2008) has shown that the relative performance of different countries in terms of health outcomes is quite different when income is taken into account than when health outcomes are compared directly.7 Some countries appear to ‘box above their income weight’ and others below it. These differences may be explained, at least in part, by the level of expenditure on healthcare and its effectiveness.

This research commissioned by ACCA will apply statistical and econometric tools to data extracted from international databases. It will assess the contribution of health expenditure and its effectiveness, along with a variety of economic, social and political factors, in countries showing better health outcomes than expected for income.

A sub-set of these findings will highlight the characteristics of health systems where levels of health expenditure are most effective – as defined by generating the best health outcomes for dollars per capita spent on healthcare, once income is taken into account. Without prejudicing the results of the research, such systems’ characteristics might include:

• the sources of finance for healthcare (tax, insurance, aid and fees)
• the quality of public finance management
• the extent to which the provision of services relies on market mechanisms
• the participation of non-governmental health service providers
• the degree of investment in healthcare technologies
• the management and payment regimes governing providers’ behaviour and productivity, including service purchasing and performance-related pay
• the financial, geographical, informational and other barriers to health service access
• different countries’ background demographic and epidemiological patterns.

If common health system features that generate superior results for income can be identified, the extent that they might be replicated in poor-performing countries will be explored. In this way the practical implications of the findings for policy will be identified in ways that could be used nationally and internationally.

Many of these issues have been researched extensively. A literature review will form an important basis for the empirical work. What distinguishes this research from similar studies, however, is that it emphasises the relationship between income and health, rather than the relationship between health expenditure and health.

The research is intended to yield results of practical as well as academic interest and is expected to be complete by the end of 2009.

Endnotes
1. PricewaterhouseCoopers (2005), HealthCast 2020: Creating a Sustainable Future, <http://www.pwc.com/extweb/pwcpublications.nsf/docid/22BD697752BAA025852572C0006F835A>, accessed 29 August 2008.
2. Timminsin, N. (2007), ‘Global Health Spending Outstrips GDP Growth’, Financial Times, 19 July.
3. OECD (2007), Health at a Glance 2007 – OECD Indicators, <http://www.oecd.org/document/11/0,3343,en_2649_34631_16502667_1_1_1_1,00.html>, accessed 29 August 2008.
4. Nolte, E. and McKee, C. M. (2008), ‘Measuring the Health of Nations: Updating an Earlier Analysis’, Health Affairs, 27(1), 58–71.
5. World Health Organisation (2008), World Health Statistics 2008, <http://www.who.int/whosis/whostat/2008/en/index.html>, accessed 29 August 2008.
6. World Health Organisation (2008), World Health Statistics 2008, <http://www.who.int/whosis/whostat/2008/en/index.html>, accessed 29 August 2008.
7. Andrews, M. (2008), ‘The Good Governance Agenda: Beyond Indicators without Theory’, Oxford Development Studies, 36(4), 379–407.