Pierre Ouellette

Health care spending as determinants of health outcomes

This paper revisits the relationship between health care spending and health outcomes. While previous researchers found it difficult to establish such a relationship based on international comparisons, the results based on rather homogenous province-specific Canadian data show that lower health care spending is associated with a statistically significant increase in infant mortality and a decrease in life expectancy in Canada. This relationship is independent of various economic, socio-demographic, nutritional and lifestyle factors, as well as provincial specificity or time trend. It is based on annual data collected from the ten Canadian provinces over 15 years.

Technological change and efficiency in the presence of quasi-fixed inputs: A DEA application to the hospital sector

Abstract Quasi-fixed inputs are present in virtually all sectors of the economy and cannot be adjusted to their optimal value even in the long-run. This constraint must be incorporated in models to correctly measure efficiency and technological change. Assuming that all inputs can be freely and instantly set to their optimal level overestimates firms/sectors/countries’ capacity to adjust, biases results, and weakens DEA method as a working tools for managers. We propose a modified DEA approach introducing quasi-fixed inputs and apply the method to hospital emergency services in Montreal to show that such limitations can be lifted.

On the Choice of Functional Forms: Summary of a Monte Carlo Experiment

The use of flexible functional forms is a standard practice in applied econometrics. Many flexible forms have been proposed. In this study, we investigate the behavior of three of them—the translog, the symmetric McFadden, and the symmetric generalized Barnett. Based on Monte Carlo experiments, we assess the ability of these forms to test theoretical properties and to measure technological characteristics.

Actual and perceived impacts of tobacco regulation on restaurants and firms

OBJECTIVE To examine the actual and anticipated costs of a law regulating workplace smoking and smoking in restaurants, taking into consideration observed and anticipated infrastructure costs, lost productivity, increased absenteeism, and loss of clientele. SETTING AND DESIGN A survey of 401 Québec restaurants and 600 Québec firms conducted by the Québec Ministry of Health before the enactment of the law was used to derive costs incurred by those who had already complied and anticipated by those that did not. RESULTS Direct and indirect costs associated with tobacco regulation at work and in restaurants were minimal. Annualised infrastructure costs amounted to less than 0.0002% of firm revenues and 0.15% of restaurant revenues. Anticipated costs were larger and amounted to 0.0004% of firm revenues and 0.41% of restaurant revenues. Impacts on productivity, absenteeism, and restaurant patronage were widely anticipated but not observed in currently compliant establishments. CONCLUSION Firms and restaurants expected high costs to result from strict tobacco regulation because of infrastructure costs, decreased productivity, and decreased patronage. That none of these were actually observed suggests that policy makers should discount industry claims that smoking regulations impose undue economic hardship.

Pharmacoeconomics and Health Policy Current Applications and Prospects for the Future

AbstractThe use of pharmacoeconomic tools has grown dramatically in the past decade as provision of healthcare throughout the industrialised world has required increased cost consciousness. However, pharmacoeconomic analysis has not yet been fully exploited as a conceptual underpinning for public or private health policy decisions. Pharmacoeconomics is likely to become an increasingly important basis for health policy decisions as a number of significant dynamics evolve in the marketplace, including: (i) consumers acting on their growing access to information and becoming more actively involved in treatment decisions; (ii) payers, providers and patients deepening their interaction and overcoming their traditional (narrow) focus on either costs or benefits alone; and (iii) manufacturers being challenged by other healthcare constituencies as sponsors of cost-based outcomes studies.

An evaluation of the efficiency of Quebec's school boards using the Data Envelopment Analysis method

In this paper the efficiency of Québecs school boards during a period of severe cutbacks in their finance is examined. Using Data Envelopment Analysis, the average efficiency is found to be relatively high. In spite of this, potential savings could be achieved if school boards were fully efficient. Results were found to depend heavily on school boards’ socio- economic conditions, thus they were subjected to Tobit analysis and the boards’ corrected efficiencies recalculated. It is concluded that inefficiencies cost 800 million dollars of which 200 million dollars come from unfavourable socio-economic conditions.

Omitted variable bias and hospital costs

This research examines the impact of omitted variables on the accuracy of parametric hospital cost function estimations based on Québec hospital level data. We assess the effect of omitted variables resulting from incomplete data on technology and performance measurement and on tests of the cost minimizing behavior of the institution. Our results show that important characteristics of hospital technology, such as returns to scale, are extremely sensitive to omitted variable bias. Similarly, estimates of hospital performance are poor indicators of actual performance when data are incomplete.

Malmquist indexes with quasi-fixed inputs: an application to school districts in Québec

In a non-market environment, there is no pressure coming from competitors that leads firms toward efficiency. Public education system is the target of many critiques as being such an example of inefficiency. Some papers attempted to measure the level of inefficiency of schools or school districts using different methods. Unfortunately, those methods do not include an important aspect of the school management that is characterized by the incapacity to adjust some inputs like buildings and equipment to their optimal level. In this paper, we use a generalization of Malmquist indexes that introduces this lack of flexibility in the measurement of productivity and we apply this method in the case of school districts in the Province of Québec (Canada).

The measurement of productivity and scarcity rents: The case of asbestos in Canada

In Order to Compute an Index of Total Factor Productivity, It Is Necessary to Know Returns to Scale and Interval Valuations of Quasi-Fixed Factors; Neither Are Directly Observable. in Resource Industries This Problem Is Compounded by the Facts That Returns to Scale Are Important and That There Is No Market Valuation of the Resource Input to Use As a Substitute for Its Internal Valuation. Both Can Be Estimated by Econometric Methods Provided the Underlying Model Is Compatible with the Theory of Technological Change Which Accounts for the Productivity Changes to Be Measured. We Estimate a Form of the Translog Cost Function Which Allows for Both Induced and Exogenous, Biaised Or Neutral, Technological Change, Using Data From the Asbestos Industry in Canada. Then We Exploit the Fact That an Internal Valuation of Quasi-Fixed Factors Is Given by the Negative of the Partial Derivatives of the Cost Function with Respect to the Appropriate Input Quantities. Not Surprinsingly, We Find That the Implicit Rental Price of Asbestos Reserves Has Dropped Sharply After 1975, But Represented a Substancial Share of Total Implicit Costs in Earlier Years. We Also Find That Induced Technological Change Is Important in the Asbestos Sector. the Econometric Productivity Index Which Is Computed on the Basis of Our Estimated Model Sharply Differs From the Divisia Index, As Computed Under the Assumption of Constant Return to Scale and Ignoring the Role of the Resource As an Input.

Do drugs reduce utilisation of other healthcare resources

BackgroundDrug expenditures per capita have drastically increased over the last quarter century in Canada, with a share of overall healthcare costs rising from 8.8% in 1980 to 16.8% in 2002. Pressure to curb expenditure on drugs has increased accordingly, but containing drug expenditure might increase costs elsewhere in the healthcare sector.ObjectiveTo measure substitution patterns between drugs and other healthcare resources over the last 25 years and thus assess whether containing drug costs might result in higher expenditure elsewhere in the healthcare system.Methods and dataA production function approach was used, in which life expectancy was modelled as a function of per capita drugs and non-drug health-care resources, among other factors. Estimates are used to calculate a marginal rate of substitution, or trade-off, between drugs and non-drug healthcare resources, for a given level of life expectancy in the population. The model is estimated from a societal perspective, with panel data techniques using Canadian provincial-level data on health expenditure and spending on physicians per capita for the period 1980–2002, as well as individual survey data on lifestyle habits such as cigarette consumption and body mass index.ResultUsing life expectancy at birth for males as the production function, increasing drug spending by