Enhancing Value of Health Care Services at Regional Level with Dr. Galina Ivanova

Enhancing the value of Health Care Services at regional level Dr Galina Ivanova

Introduction 1 Health Care Services (HCS) industry (eg hospitals, general practice, specialists, pathology, diagnostic, ambulance) is an important part of prosperous regions. Quality HCS is crucial for attracting new industries, retaining the existing ones and attributing to the overall social and economic prosperity of the region. HCS industry creates employment and generates income but it does not necessarily create linkages with other industries in the region and therefore it does not contribute fully to the prosperity of the regions. The economic impact assessment (EcIA) of HCS: cost effectiveness analysis, cost utility analysis, cost benefit analysis or budget impact analysis. changes in funding, community demographics, employment and income are reported. general equilibrium or input output (IO) analysis but generally present income, employment and other multipliers at a state or country level. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Introduction 2 EcIA usually is not extended to the analysis of how the industry fits into the region s web of industrial interrelationship. There is also a little understanding on how to use the estimated effects to further enhance the value of presence of HCS in the region. Another issue is that higher spending does not mean higher average life expectancy there is the need to improve the HCS at regional level at the same amount of funding. Health outcome such as mortality and morbidity depends on health factors which are influenced by programs and policies with socio economic factors including employment, income and access to the clinical care contribute to 60% of health outcomes. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Methodology The new methodology of identifying the potential to enhance the value of the HCS Understand the regional structure using EcIA tools Key sectors of the region (Input Output Analysis) Connections of key sectors and HCS industry in the region Using procurement strategies to increase value of HCS at regional level Case study: Fitzroy SD region, Queensland, Australia CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

The input output (IO) analysis: a (very) brief review 1 The IO technique: structure of economy, the effects of changes in a given sector(s) and/or final demand and a key sector analysis. Demand and supply driven effects (backward and forward linkages). Backward linkages: demand more inputs from the sectors whose products are used as inputs to the HCS sector (e.g. Accommodation and Food Services industry). This effect is limited to what inputs are available in the region. Forward linkages: sells more of its services to other sectors. This effect is limited by the level of the population and its health status. Backward and forward linkages are used to identify the key sectors. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

The IO analysis: a (very) brief review 2 A key sector: both high backward and forward linkage indexes and low backward and forward spread indexes. Key sectors of the economy measure the strength of the relationships of the intermediate sectors. Economic development is occurring when the sectors have above average linkages. Only a small number of sectors can be considered the key sectors which amplify the initial change in the economy more than other sectors. Therefore, the identification of the key sectors can assist in economic planning to stimulate overall economic growth. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

The input output table Intermediate Sectors Purchasing Processing Matrix sectors Total Output Final Demand Selling 1 2 n sectors X1 X2 1 a11 a21 a12 a22 a1n a2n d1 d2 2 Xn A n an1 A1 V1 X1 an2 A2 V2 X2 ann An Vn Xn dn Ad Vd D Primary inputs Other inputs V Total Inputs X CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Fitzroy SD, Queensland, Australia Gross Regional Product: Coal Mining, Metal Manufacturing and Electricity, Gas and Water Supply and Distribution. Employment is the highest in Retail,HCS and Manufacturing industries Higher wages were paid to the Coal mining, HCS and Professional and Administrative Services CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

HCS industry in Queensland and Fitzroy SD The HCS in Queensland are one of the largest employer and generates substantial income in the regions The HCS industryaccount for 12.1% of total persons employed in Queensland and 9.9% in Fitzroy SD. In Queensland, the largest employers are HCS (12.1%), Retail Trade (10.8% ) and Construction Sectors (9%). In Fitzroy SD, the largest employers are Retail Trade (9.9%), HCS (9.9%) and Manufacturing Sectors (9.7%). The HCS industryaccount for 13.1% of total income generated in Queensland (first) and 10.1% in Fitzroy SD (second after Coal Mining). CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Health Care Services: Disaggregated Output Total Multipliers, Queensland 0.25 Output, open model 0.20 Output, closed model 0.15 0.10 0.05 0.00 CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

HCS industry at regional level Need inputs from the same industries as it does at the state or national level. Most of the inputs are imported to the region from the outside of the region suppliers. There can be a scope to source more inputs from local industries such as local administration, accommodation and other services, some food items to reduce the overall costs. Increasing supply from local firms could benefit the communities and the region. On average about 40% of business turnover leaks outside the local economy. Creating economic linkages among local businesses, communities and local government can enhance economic wellbeing of local communities. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Top sectors, disaggregated HCS multipliers, Qld Rank Open model Output Employment 1 Professional & Admin Services Professional & Admin Services 2 Rental & Hiring Public Admin & Defence 3 Media & Telecommunication Retail Trade 4 Wholesale Trade Wholesale Trade 5 Finance & Insurance Rental & Hiring 6 Public Admin & Defence Media & Telecommunication 7 Electricity Generation Accommodation and Food 8 Wood Products Manufacturing Health Care Services 9 Transport & Storage Services Art, Sport, Recreation & other 10 Metal Manufacturing Finance & Insurance CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Key sectors in Fitzroy SD region, open model Sector Name Backward Forward Average Output linkage spread linkage spread linkages spreads 10 Wood Products Manufacturing 1.08 0.68 1.43 0.60 1.25 0.64 26 Water Transport 1.05 0.85 1.46 0.84 1.26 0.85 Income 10 Wood Products Manufacturing 1.14 0.75 1.73 0.58 1.43 0.67 21 Wholesale Trade 1.05 0.88 1.21 0.49 1.13 0.69 24 Road Transport 1.18 0.79 1.18 0.53 1.18 0.66 26 Water Transport 1.09 0.84 1.25 0.74 1.17 0.79 28 Postal services 1.01 0.68 2.61 0.75 1.81 0.71 29 Transport and Storage Services 1.15 0.92 1.87 0.88 1.51 0.90 Employment 10 Wood Products Manufacturing 1.11 0.74 1.78 0.66 1.44 0.70 24 Road Transport 1.25 0.83 1.21 0.54 1.23 0.68 28 Postal Services 1.04 0.69 2.56 0.74 1.80 0.72 29 Transport and Storage Services 1.10 0.82 1.61 0.75 1.36 0.78 CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

HCS industry in Fitzroy SD HCS industry is not the key sector in the case study but it has linkages with key sectors in Fitzroy economy. In the case study, the key sectors with the higher than average backward and forward linkages include Wholesale trade, Wood Products Manufacturing (paper manufacturing and printing), Transport and Storage industries among others. These are the same sectors that are in the top ten of the HCS industry multipliers. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Using procurement strategies to increase value of HCS at regional level Encourage connections with the key sectors of regional economy can bring significant social and economic benefits to communities: increasing local employment, increasing the skill base at local level, enhancing community wellbeing, stimulating the development of local business, strengthening competitiveness (Watson 2006). In order to increase the benefits to the region policies need to be tailored specifically to each region s needs. For example, in Fitzroy SD in order to increase employment and income in the region, more inputs for HCS need to be sources from local road transport and printing services. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Summary HCS add substantial benefits to the regional economy. To increase the value of HCS at regional level the policy should utilise regional differences. First, the key sectors of the regional economy need to be identified output, income/value added, employment. Second, the structure of purchases and sales of the industry of interest at a larger scale (eg state or national) need to be identified. Third, map the connections among the key sectors of the region and the main trading partners (sales and purchases) of the industry of interest. Fourth, using consultations with relevant stakeholders suggest local procurement strategies to increase the value of industry of interest at regional and local levels. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D

Further reading Ivanova, G.(201x). Enhancing the value of HCS at regional level." forthcoming. Ivanova,G. & Rolfe, J. (2011). Using Input Output Analysis to Estimate Impact of Coal Industry on Regional and Local Economies. Impact Assessment and Project Appraisal, 29 (4): 277-288. Ivanova, G. (2014). The mining industry in Queensland, Australia: some regional development issues. Resources Policy, 39: 101-114. Esteves, A. & G. Ivanova (2015). Using Social and Economic Impact Assessment to guide local supplier development initiatives. Handbook of Research Methods and Applications in Economic Geography, Cheltenham, Edward Elgar. CRICOS Provider Codes: QLD 00219C; NSW 01315F; VIC 01624D