Connect with us


Newsletter EnglishFrench Spanish  


Twitter @TheConstellati1


Youtube channel: The Constellation SALT-CLCP
Can Medical Technology Solve the Health Care Problem?

By UWE E. REINHARDT, July 2, 2010, 

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

Last week I had the privilege of attending two fascinating conferences in London, each focused on basically one question: Can enterprises engaged in the development of new medical technology invent new technology that is affordable in the so-called "emerging markets" of the world –- countries like China and India, and Brazil, for example.

The first conference, the Pacific Health Summit 2010, was organized by the United States-based National Bureau of Asian Research. The second, the Forum for Sustainable Health, was organized and sponsored by the Center for Sustainable Health of the Biodesign Institute of Arizona State University.

Participants in the two conferences included government officials, health care providers, biomedical researchers and policy analysts and industry executives from different parts of the world. Government officials and policy analysts set forth what was required. The researchers and industry executives responded with what seemed feasible.

What seems feasible is encouraging.

In the future, imaging devices, including magnetic resonance imaging, will be available globally at a fraction of their current cost. For example, on display was a hand-held ultrasound device roughly the size of a BlackBerry and capable of taking sonar images of the heart and other organs. That device, it was predicted, will someday soon become as ubiquitous a diagnostic tool in the medical trenches as is the stethoscope today. The device can transmit images from the trenches — e.g., a village — to distant medical centers for further analysis.

Another insight one gains from such international exchanges, however, is that, pressed as they are by economic circumstance, some of the emerging countries — notably India — have developed health care processes that deliver first-rate health care at much lower costs than comparable care costs in the developed world, notably the United States. Lower labor costs alone do not seem to account for all of the lower costs.

It was agreed that more and more, these countries have something to teach the developed world about health care processes, including heavier reliance on physician substitutes equipped with telemedicine (see, for example, "Turning the World Upside Down: The Search for Global Health in the 21st Century," by Nigel Crisp).

It occurred to me during our discussions that while efforts at developing low-cost technology currently are stimulated mainly by the needs of emerging markets, they also will have to be part of the solution to the mounting health care cost problem in the developed nations — especially in the United States — as will the lessons the emerging economies can teach us about more cost-effective health care processes.

The chart below, taken from an illuminating publication of the Census Bureau, underscores this point.

According to the chart, there currently are about 4.5 (i.e., 100/22) working-age Americans for each person over 65 — and 2.2 for each person over 65 or under 20. These numbers will fall to 3.57 and 1.35, respectively, 10 years hence, and to 2.85 and 1.2 by 2030.

The only solace for Americans is that the same ratios will be even lower in many other countries, including most of Europe, Japan and China.

The provision of health care remains a highly labor-intensive activity in all health systems. In the coming decades, they will have to compete for labor in increasingly tighter labor markets. That trend will inexorably drive up unit labor costs in health care, unless there soon emerges a major thrust toward new medical technologies that can directly or indirectly economize on the use of labor in health care. It is the main challenge the world now poses to the medical technology industry.

Consider the flowing taxonomy of medical innovations. The focus there is on total treatment costs, to highlight the fact that a new technology that may be expensive by itself may nevertheless reduce the overall cost of treatments — e.g., by reducing the need for hospitalization. Drugs for H.I.V./AIDS, for example, have had this effect.

What is desperately needed in the years ahead — even in the developed economies, like the United States — are new technologies falling into cells A, B and C.

Although it may seem heresy even to contemplate new technologies falling into cell C, the day may come soon when such technologies will be countenanced, if sizable cost savings could be achieved thereby with only a modest sacrifice in the quality of outcomes.

In the past several decades, many of the new medical technologies developed have fallen into cell G, and sometimes into cell H as well. It is one reason new technology has come to be viewed in United States policy circles as a major cost driver, in full recognition that often, albeit not always, it has also brought with it remarkable benefits.

Many countries use formal cost-effectiveness or benefit-cost analyses to explore into which cell of the matrix newly emerging technologies or treatment methods fall and, for cells C and G, how added costs compare with added benefits. These analyses then become one of several factors considered in decisions on third-party coverage and payments. They can also directly inform the decision of physicians and their patients in what is now called "consumer-driven health care."

It is remarkable that for all the lip service it pays to the need for cost control in American health care, Congress still expressly forbids considerations of "costs" in the "comparative clinical effectiveness analysis" called for in the recent health care bill.

In other words, Congress has declared the "total treatment cost" dimension of the matrix above as forbidden territory, lest it stand accused of establishing death panels. I have already commented on this phenomenon in earlier posts.

Views: 10

Reply to This

© 2023   Created by Rituu B. Nanda.   Powered by

Badges  |  Report an Issue  |  Terms of Service