It is kind of the Chairman to call me Dr. Martin, but I have to point out that I am not a medical doctor in any sense. I am another kind of doctor. It is not clear whether the investment that was made was worth it.
I wish to discuss the evidence of inefficiency in health care systems. There are large variations in inputs and outputs seen across all OECD countries, for example. The figures are documented in the chart book which has been circulated. I may refer to some of the statistics later in my presentation or during the question and answer session. The numbers constitute strong prima facie evidence that there is room for improvement. As economists and policy makers, we know that the health sector is characterised by what economists call a wide range of market failures. There is strong public intervention in inputs and outputs. There can be excess spending or wrongly allocated spending in such circumstances. What evidence is there in respect of potential avenues which are worth exploring if we are to increase efficiency? We could use demand management tools to examine demand, for example, by using general practitioners or other practitioners as gatekeepers. This well known tool has been used in many countries such as Australia, Canada, Denmark and the United States.
There are many issues relating to waiting lists, particularly in systems in which one has to wait for a long time for elective surgery. A mechanism which introduces more clinical prioritisation of waiting lists is widely used in New Zealand and is believed to have had some success.
I spoke earlier about sharing costs, encouraging greater use of cost-effective care and developing ways of refining cost-sharing mechanisms. The dissemination and practice of evidence based medicine is popular. Everybody is in favour of it, but it is proving difficult to put into practice. Who could be against it? It is quite difficult to encourage practitioners to be aware of what appears to be best practice and to ensure they always use it. If they do not follow best practice, it is difficult to develop mechanisms to encourage them to move closer to what is regarded as best practice.
It is right that I should discuss the appropriate skill mix of health professionals in the immediate aftermath of Colm McCarthy's presentation which focused on Ireland's much lower ratio of doctors per head of population than many other OECD countries, a statistic which is clearly borne out by international comparisons. It is a long-standing issue in Ireland. Problems are caused by the numerous clauses system which restricts strongly the entry into medical schools. Such restrictions are common across OECD countries. Many countries are seeking ways of alleviating the shortages they experience. One should bear in mind that even if one increases the number entering medical schools, it takes a long time to produce fully experienced and practised clinicians. One cannot double the number of places in medical schools by waving a magic wand overnight, as one will have to wait for at least seven or ten years. We have a large stock relative to the inflow.
Some countries are seeking to recruit fully trained practitioners from abroad. Many OECD countries are seeking to recruit doctors and nurses from other countries, including non-OECD countries. It is a long-standing tradition in Ireland, for example, to recruit nurses from the Philippines. Many problems are associated with draining skilled health care professionals from developing countries which may have a greater need. It is a somewhat more complicated matter than it might appear when one listens to those who say the rich countries are poaching health care professionals from poor countries.
We recently conducted a detailed case study of South Africa, which is an attractive country for recruitment for a number of OECD countries, including Australia, Canada, the United Kingdom and, to a limited extent, Ireland. While doctors and nurses are leaving the South African health care system to go to such countries, many of them are doing so because they have great concerns about education, conditions of work and the quality of the South African health care system. It is interesting that the number of professionals in the South African health care system has not decreased because South Africa has been recruiting in the rest of the sub-Saharan region. It has been draining professionals from Zimbabwe, Uganda and Mozambique. Interestingly, South Africa has recruited a large number of health care professionals from Cuba.
There is an issue relating not only to doctors, but also to the mixture of doctors and nurses. Should the number of nurse practitioners, or nurses who are taking on a range of tasks which were restricted solely to doctors in the past, be increased in some countries? The idea is being explored intensively in some countries as a way of increasing value for money and changing the balance of professionals.
I wish to discuss provider payment methods. How can we increase productivity, as economists would describe it? We could develop methods of payment which are much more closely related to activity and outcome. An interesting experiment is under way in the US Medicare system, for example. Payments are being made to hospitals on the basis of their performance ranked on a range of 35 quality indicators and the standard activity based formulae. The system is being monitored to see if it produces better performance, cheaper costs and better patient satisfaction.
The second area which shows great promise, although it requires a significant investment upfront, involves the use of automated health data systems and a greater use of information and communications technology. Among the most exciting innovations in this area in recent years has been the introduction by the administration responsible for US veterans' hospitals, a publicly funded system which was regarded ten years ago as extremely inefficient, poor in quality and very expensive, of a major series of investments in electronic patient records, information and communications technology and the electronic tracking of medication records. The first results of this investment are quite extraordinary. Medication errors have dropped by about 15% to 20%, the cost of treating patients has declined by 25% and measures of outcomes such as survival ratios have significantly improved. The investment has helped to ensure that doctors and nurses are fully clued in and paper records have essentially disappeared.
While the system is expensive, it illustrates how short-term investments in capital and software can lead to significant medium-term improvements. People who have struggled with health care systems in a number of European countries and have experienced difficulty with the volume of paper records and in trying to track patient information will acknowledge the significant potential of electronic mechanisms to improve efficiency.
The management of health technology is also important. One must decide what to do about increasing expenditure on drugs in most systems while the new drug treatments which are emerging all the time are becoming more expensive. Systems must be put in place to evaluate new drug treatments quickly and decide whether they offer a real improvement or constitute cosmetic or less essential treatments in respect of which reimbursement should not be made. There is also a need to put in place systems to make decisions on new health technologies. The National Institute for Clinical Excellence in the United Kingdom has shown that while systems can be put in place, the process is not easy. While the introduction of such systems will not yield enormous gains in the short run, any investment will probably be significant and useful in the medium and long term given the impact of technology and the continual pressure from pharmaceutical companies on health care systems to validate new drugs and innovations.
It is probably reassuring to everyone that even if we have better knowledge than in many other cases, improving health system performance is a difficult challenge which requires continuous effort and innovation no matter which country one is in. Given the wide range of goals of policy makers, there must be trade-offs. There are no simple, easy answers and trade-offs are inevitable in difficult areas such as responsiveness, equity of access, costs, efficiency considerations and quality. The experience of OECD countries over the past two decades has been that making major changes is very difficult. The record in some countries of major reforms which have been reversed or thrown out after a few years is quite extraordinary and sobering. It demonstrates the need to involve all stakeholders and reform in a very iterative way.
Coming from an international organisation, my next point is probably a little self-serving. International comparisons can provide useful guidance to national policy makers as monitoring and benchmarking are essential. I hope this presentation and the previous one by Colm McCarthy, in which he made some international comparisons, demonstrated that for committee members.
The OECD carried out twelve research projects under its overall health project, of which two have specific relevance for Ireland. The first was a detailed project on tackling excessive waiting times for elective surgery under which we produced two extensive, major research documents, copies of which I have provided to the committee's clerk. They are also available on our website. The second was a specific study on private health insurance in Ireland, a copy of which has also been provided to the clerk and which can be consulted on our website. That closes my formal presentation and I will be happy to answer any questions members wish to raise on this or other aspects of it.