Austere times demand healthcare efficiency: OECD

Austere times demand healthcare efficiency: OECD

London: Cash-strapped governments can no longer raise spending to improve healthcare at the breakneck pace of recent decades, so they must make systems more efficient to offer quality care at no extra cost, the OECD said on Monday.

The Paris-based Organisation for Economic Co-operation and Development (OECD) noted that improving efficiency can do more to raise life expectancy than simply spending extra money.

Healthcare is now one of the largest sectors of government spending, and one likely to be curbed by the global economic and financial crisis, OECD economists said in a report.

They found that Australia, Japan, South Korea, Switzerland and Iceland get the best health outcomes for the money they spend, while Denmark, Greece, Hungary, Slovakia and the United States have the widest margin for improving health outcomes without spending any more.

If all countries were to become as efficient as the best performers, life expectancy at birth could be raised by more than two years on average across the mostly wealthy nations that are OECD members, without any increased healthcare spending, the report found.

This compares with a 10% increase in healthcare spending which OECD economists calculated would increase life expectancy by only three to four months if no efficiency improvements were made.

The report, which was based on data from 29 OECD countries, noted a sharp rise in health spending -- which it said has grown by more than 70% per capita in real terms since the early 1990s. This has led to steady improvements in health outcomes across the OECD.

“Life expectancy has increased by one year every four years, survival rates from diseases like cancer are up, and premature births and infant mortality have dropped dramatically," it said.

But it said its analysis showed there is uneven healthcare efficiency performance across OECD countries.

“Healthcare costs are escalating rapidly, driven by population ageing, rising relative prices and costly developments in medical technology. Public health care spending is projected to increase by 3.5 to 6 percentage points of GDP by 2050 in the OECD area," the report said.

“Against this background, exploiting efficiency gains will be crucial to meet rapidly growing health care demand, without putting the public finances on an unsustainable path."