Participants demonstrated different preferences regarding specifically how to track expenditures and output (and eventually outcomes) associated with medical treatments. Whether by encounter, by episode, or by person, all agreed that the appropriate concept depends a great deal on the specific application. For example, for price index work, a person-based approach may not be as appropriate as an episode-based approach. If the goal is to broadly compare costs and health improvements within a given disease on a micro level, as is done in cost-effectiveness studies and decision analysis, a person-based regression approach might be right. BEA participants noted that more research is needed on the virtues and limitations of various methods.

Participants embraced BEA’s two-stage strategy for implementing the satellite account that involves first getting expenditures classified, then moving on to quality change issues. There was general acknowledgment that, because such information serves as a building block for many kinds of health data systems, creating new ways of organizing and tracking health care expenditures is an immediate priority. This work should prove useful for both the experimental health accounting and national income and product accounting purposes, as well as for price and productivity measurement. Once the nominal flows for the sector have been figured out correctly, BEA can then move on to estimating improved disease-based price indexes.

Although the plan is to defer integration of some aspects of price work until a greater consensus about methods emerges, participants emphasized the importance of thinking about quality change from the beginning. Ideally, the satellite account should move forward in coordination with work proceeding elsewhere in the health economics literature, which implies focusing on outcome trends. Ultimately, moving beyond measurement only of medical care inputs will allow researchers to gain greater insights into traditional economic issues, such as productivity growth and quality change in medical care. This underscores the importance of drawing on expertise from medical researchers to help evaluate trends in treatment outcomes.

Participants also agreed that medical care deflators or indexes should reflect price changes associated with changes in inputs—for example, moving from surgical to drug treatment or inpatient to outpatient settings; ideally, they would also be able to assess whether quality has improved, deteriorated, or remained constant. If quality changes, for better or worse, that should be reflected in the calculation of real output. Both BEA and the Bureau of Labor Statistics (BLS) presented research showing progress in this area but noted that the capability to adjust price indexes to reflect trends in outcomes is still a long way off, and the agencies would be relying heavily on the academic community to point the way.

Several participants suggested that BEA (and BLS) should do more to document their plans and progress. Requests were made for two papers from BEA: one that discusses the accounting system and proposed changes to it; and another that



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