Centre for Health Economics 19 January 2021
- Understanding the drivers of growth in health care expenditure is crucial for forecasting future health care requirements and for the efficient use of resources. This paper considers total hospital admitted care expenditure in England between 2009/10 and 2016/17.
- Decomposition techniques are used to separate changes in expenditure into elements due to changes in the distribution of characteristics, of both individuals and the services they receive, and due to changes in the impact of characteristics on expenditures. Growth in aggregate expenditure was due to increases in total patient admissions together with a substantial shift towards episodes of non-elective care, particularly the use of long-stay care. Decomposition of patient level expenditure suggests efficiency gains in treatment across the full distribution of expenditures, but that these were outweighed by structural changes towards a greater proportion of patients presenting with high-dimensional comorbidities. This is particularly relevant at the top end of the expenditure distribution and accounts for a large proportion of the total expenditure growth.
