OECD health ministers met in Paris on 7th-8th October 2010 to reflect on the tremendous progress made in the health of the populations of their countries, due in no small part to the improvements that have been made in health systems. But they also considered the difficult path they must walk in the future. Countries have to improve the value they get from the large and increasing investment they are making in health care. This is now all the more difficult – and urgent – in light of the difficult fiscal situation facing many countries in the aftermath of the economic crisis.

OECD countries have made tremendous strides in improving population health over recent decades. Life expectancy at birth has increased, rising on average by ten years between 1960 and 2008. Today, a woman aged 65 can expect to live another 20 years, and a man an additional 17 years. And although socio-economic inequalities in health status and access to care remain, reductions in child mortality and gains in population health have continued to improve at a steady pace. These achievements can in part be attributed to increased incomes and higher levels of education. But a good portion of these gains comes from improvements in health care itself – through technological progress and evidencebased treatment, in particular.

This chapter starts with a look at recent trends – focusing on the last decade and a half – in health spending and its components. The main drivers behind health expenditure growth are then discussed and, on the basis of this, possible future spending pressure. The chapter then presents a brief assessment of the current macroeconomic situation facing OECD countries, drawing on the latest projections of countries’ fiscal positions and concludes with a discussion of recent evidence on the degree of system inefficiency, suggesting that there is scope for addressing sustainability, financial or economic, by improving the efficiency of resource use to that of the best performers.

This chapter reviews policies that have been used in OECD countries both to control health care spending and their impact on health systems objectives. On the supply side, macroeconomic policies controlling inputs or prices of health services have been widely used. Provider incentives aimed to improve efficiency are increasingly being used. On the demand side, policies have first focused on shifting costs to the private sector; they now seek to reduce the need for health care through prevention and information, and to encourage better co-ordination of care. It explores the risks and trade-offs of quick cost-cutting fixes versus longer-term gains in efficiency.

Patients, providers and payers have a common interest in ensuring that health care systems do not waste resources. Evidence-based medicine (EBM) and health technology assessment (HTA) can help by focusing on two simple questions: does it work, and is it worth it? This chapter explores potential efficiency gains that might be achieved by introducing more rational decision making into clinical care and looks at how clinical guidelines and health technology assessment can be used to inform these decisions. It then reviews how these functions are realised in institutions throughout the OECD.

Many OECD countries are experimenting with new methods of providing incentives to providers to improve the quality of health care, often known as “pay for performance” (P4P). Yet it remains unclear – in part due to a lack of good data – whether these new ways of paying providers (hospitals, primary care, integrated systems) significantly improve the quality of care and increase value for money in health. Experience to date suggests that it is possible to improve quality and efficiency by paying for it, for example in public health interventions such as cancer screening, and in getting physicians to follow evidence-based guidelines for chronic conditions like diabetes and cardiovascular disease. This chapter looks at cases where P4P appears to be producing good results and analyses the numerous factors that affect the implementation of incentive programmes, such as the challenges involved in establishing quality measures, collecting data, and monitoring it for performance – a prerequisite for designing effective P4P schemes.

Health care systems in OECD countries have become increasingly complex: multiple providers, lack of adherence to care protocols, inconsistencies in reimbursement and decentralised medical records are still the status quo in most OECD health systems. The problems that health systems have to deal with have evolved too: with more patients receiving care from multiple providers for chronic conditions, there is a growing problem of fragmentation within health systems. This results in poor patient experiences, coupled with ineffective and unsafe care. Can better co-ordination contribute substantially to solving these problems? What tools can be used to improve the co-ordination of care? This chapter explores the barriers to good co-ordination and looks at what can be done to improve the co-ordination of care in health systems across the OECD.

OECD countries’ pharmaceutical policies generally focus on three main objectives: making medicines accessible and affordable to patients; containing public spending growth, and providing incentives for future innovation. This chapter provides a brief review of current pharmaceutical reimbursement and pricing policies in OECD countries, as well as short-term measures adopted in response to the economic crisis. It then focuses in particular on two important issues: decisions pertaining to the coverage of new products with high costs and/or uncertain benefits, and the development of generic markets.

Evidence suggests that information and communication technologies (ICTs) can make significant improvements in health care delivery – reducing medical errors, improving clinical care through adherence to evidence-based guidelines, and preventing duplication and inefficiency for complex care pathways. ICT has great potential to increase value for money in health, yet the health sector lags far behind other parts of the economy in exploiting the productivity benefits of ICT. This chapter looks at the increasingly use of ICT to redesign health systems to achieve better performance.