Improving the measurement of health system output growth

National income accounting practice is to weight health service activities by their cost so that they can be aggregated into an output index. Quality changes are ignored. We propose an 'ideal' value weighted output index in which the value attached to each output reflects its contribution to health outcomes and other characteristics valued by patients. Calculation of the index for the health system as a whole is currently infeasible because of a lack of data, especially on health outcomes. We demonstrate alternative ways of combining health outcome data with existing information on post-treatment survival, life expectancy and waiting times to construct quality adjusted cost weighted and health outcome weighted indices for a small set of hospital activities for which there are health outcome data. Copyright (C) 2007 John Wiley & Sons, Ltd.