Measures of productivity need to reflect industry’s changes

The new U.S. Bureau of Labor Statistics measure of hospital productivity, featured in the July 13 editorial (“New approaches needed to solve hospitals’ productivity woes,” p. 30) admittedly rests on a crude measure of output. Under the BLS measure, output is basically a count of services provided that does not account for how services have evolved, and quality and outcomes have changed.

As the editorial rightly points out, the measure fails to take into account quality advancements. Over the past 10 years, hospitals have made significant improvements in patient safety, adherence to evidence-based care and patient satisfaction. Between March 2008 and June 2012, nationwide scores reported by Medicare’s Hospital Compare website show steady improvement across all measures of patient experience. Since 1999, mortality due to heart disease has fallen by 25%, cerebrovascular disease by 32%, pneumonia by 21% and cancer by 6%.

These improvements in medical practice, quality and outcomes make a real difference in people’s lives and imply a significant change in output that needs to be accounted for in any measure of productivity. A simple count of services alone misses the mark. In fact, economists have noted that in some sectors, such as education and nursing, productivity cannot improve rapidly because of human factors. For example, it takes a nurse essentially the same amount of time to change a bandage today as it did 20 years ago. What’s more, Medicare is adjusting its payment updates and value-based payments for productivity improvements and efficiency measures.

Finally, as one examines this topic, a broader look that considers the shift from inpatient to outpatient care is needed. A count of adjusted admissions—a composite measure of inpatient and outpatient volume—finds that hospital volume actually rose by 22% between 2001 and 2013. This increase is slightly more than the increase in hospital employment, demonstrating that hospitals are evolving not only to improve patient care and the treatment of illness within their walls, but to accept responsibility for maintaining and encouraging health in their communities.

Linda E. Fishman Senior vice president of public policy analysis and development American Hospital Association