Accounting for the quality of NHS output

Research output: Working paperDiscussion paper


Output measures used in the national accounts aspire to capture as comprehensively and accurately
as possible the value that society places on everything produced by the economy. Given that
economies produce heterogeneous products, some means of defining and valuing these is required
so that a single aggregate measure of output can be constructed.
For products traded in the market economy this is conceptually quite straightforward, but it requires
the assumption that prices reflect marginal social values and equate to the marginal costs of
production. For products and services made available by the ‘non-market’ economy, encompassing
sectors such as defence, education and health systems, among others, the above assumption does
not hold. People access and use the services provided by these sectors but rarely pay for them at
point of use or, if they have to pay something out-of-pocket, it is usually subsidised.
So, for ‘non-market’ products, two ways have been proposed to construct an equivalent output
measure: (1) to substitute information about the price of the output with its cost of production,
making the assumption that marginal costs equate to marginal social values and (2) to describe and
capture the characteristics of each product, recognising that products with more desirable
characteristics are of greater value. In common parlance, this bundle of characteristics reflects the
overall ‘quality’ of the product.
A combination of these two general approaches has been adopted to assess the contribution of the
English National Health Service (NHS) in the national accounts. Current practice in accounting for the
quality of healthcare services makes use of routinely available information in order to capture the
QALYs associated with treating patients, by combining information on survival rates, life expectancy
and a measure of change in health status before and after treatment. The process of care delivery is
captured by measures of treatment waiting times.
This approach may overlook other important characteristics of the quality of healthcare. This review
provides the conceptual framework needed to select potentially appropriate characteristics of
healthcare outputs. To this end we evaluated three published sets of criteria developed by national
bodies responsible for assessing healthcare system performance. We also sought the opinions of UK
experts on quality expressed at a workshop. From this process seven criteria were established. We
next reviewed two sources of quality indicators currently collected and reported for the English NHS:
the NHS Outcomes Framework indicators and NHS Thermometer indicators. A schema, including
indicator name and source, data source, time period covered, definitions and purpose, was
developed for each of the indicators. Indicators were individually assessed by the research team,
and one expert from the Department of Health and one from the Office for National Statistics in
order to establish whether they met each of the identified criteria. Depending on the level of
consensus among reviewers, a maximum of 17 indicators were short-listed for potential use as
quality adjustors for NHS output, all of which are NHS Outcomes Framework indicators.
Original languageEnglish
Place of PublicationYork, UK
PublisherCentre for Health Economics, University of York
Number of pages62
Publication statusPublished - Apr 2018

Publication series

NameCHE Research Paper
PublisherCentre for Health Economics, University of York, York, UK

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