Healthcare's growing share of GDP makes improving productivity in this sector vitally important. MGI compared the productivity of healthcare systems in the U.S., Germany, and the U.K. and found that the U.S. was in the lead.
In recent years, the health care systems of almost all major industrialized countries have come under significant pressure to improve performance. This MGI study seeks to assess differing productivity levels at the disease level, examine the major source of these differences, and identify implications.
Summary of health care system structure and regulation
The U.S. was the most product-based system with substantial freedom for payors and providers giving the U.S. system relatively high levels of competitive intensity but generally low product integration. The U.K. system was the most centrally controlled of the three and had low competitive intensity but high product integration. While the German system was highly regulated, it had relatively low levels of competitive intensity and product integration.
With better outcomes and fewer inputs, the U.K. was clearly more productive than the U.S. in diabetes treatment. The U.K.'s productivity efficiency stemmed from its consistently lower complication rates.
The U.S. was more productive than the U.K. on a per-operation, per-laparoscopic cholecystectomy, and per-open cholecystectomy basis because it used fewer inputs in each case while achieving the same outcomes. Germany was more productive than the U.K. on a per-operation basis.
The most important factor in the U.S.' better productivity levels compared to the U.K. was the less prevalent screening in the U.K. Germany's productive efficiency relative to the U.S. was lowered by its longer hospital length of stay.
Germany uses 21 percent more inputs and achieved 12 percent worse outcomes than the U.S. in the treatment of lung cancer. The U.K. productivity levels were even worse.
The speed and extent of technology adoption along with the intensity in care triaging were the most important drivers in determing productivity differences between the U.S. and U.K. The more frequent inpatient care and lengthier care were the most important drivers of Germany's lower productivity relative to the U.S.
While at the aggregate level, life expectancy outcomes showed no significant differences among the U.S., Germany, and U.K., significant variations in treatment outcomes were observable at the disease level. In the disease case studies, outcomes were generally best in the U.S. and worst in the U.K.
Implications for policymakers and health care organizations
MGI's study suggests three broad principles for improving productive efficiency: recognize and leverage the power of economic incentives, allow markets to define health care products broadly and ensure that there are not regulatory barriers, and allow for experimentation and flexibility in the system on the part of health care organizations and providers.
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How IT enables productivity growth IT was only one of a number of factors that led to significant productivity growth. Read more
Productivity: The key to an accelerated development path for Brazil Brazil's economy enjoyed strong growth up until 1980 and has been stagnant through the '90s. Read more
