A Comparison of GDP-Based Productivity in Ambulatory & Inpatient Healthcare: 1998-2005

Abstract

A comparison of GDP-based productivity in the ambulatory and inpatient (hospitals and residential treatment centers) healthcare segments shows that labor productivity, measured as GDP dollar contribution per compensation dollars, hours worked and full-time equivalent employees was strong in both actual value and in per cent gain (1998-2005). The actual values were higher in ambulatory with GDP contribution per hours worked ranging from $0.04-$0.06 (24% gain), per dollar of compensation ranging from $1.41 to $1.48 (4% gain) and per FTE from $71,000 to $94,000 (25% gain) as opposed to $0.02 to $0.03 (3% gain), $1.10 to $1.13 (3% gain) and $38,000 to $52,000 (42% gain) for inpatient healthcare. In contrast, capital efficiency was static for both segments over this period indicating that the use of capital was ineffective. Total Factor Productivity (TFP) was also calculated and showed a similar pattern with ambulatory healthcare having higher TFP throughout the period, but neither healthcare segment showing any gain (or loss) in TFP. The two segments have different profiles for the factors influencing TFP with inpatient healthcare having made both some R&D and substantial technology investments, mainly in medical devices. Neither segment has made large organizational or work process changes, and it appears that substantial, additional productivity gains could be made as these factors, R&D investment, technology acquisition and adoption, work process and organizational redesign, are emphasized.