This month's Technology Review has a nice piece ("A Pound of Cure") on the importance of electronic medical records (EMRs) to the future of health care. The article takes the issue beyond the mundane cost/convenience arguments for EMRs, and puts it in the proper context of a future health care system that is preventive, predictive, and, more personalized. Of course, EMR implementation is only a first step toward this end, but the author reminds his readers that this step is yet to be embraced by a trillion dollar 'health' industry that ultimately survives by selling things to sick people, rather than by keeping people healthy.
Today, thirty-five years after Wall Street began phasing out physical stock certificates, when virtually every industry from airlines to zoos employs integrated electronic record-keeping and tracking, the U.S. health care system still stubbornly refuses to adopt technology that could save doctors' offices and hospitals hundreds of billions of dollars (according to Richard Hillestad of the Rand Corporation, Health Affairs (2005)), and facilitate further cost- and life-saving measures by allowing comprehensive data collection and comparative safety/efficacy analysis of existing therapies. Such data, not accessible via our modern dinosaur system, are usually invoked for their policy (e.g., regulatory and reimbursement) implications, but they are less often appreciated for their importance to technology development (see my original post on the role of innovative medical technology, and why it is a powerful tool for the cost-reduction campaign). Simply, when scientists and engineers have more data and a clearer picture of relative effectiveness, they tend to ask better questions to direct better research.
I acknowledge that early detection and prevention are ambitious, complex undertakings, years in the future, and far from automatic once EMRs are in place. But it is difficult to imagine how any such advances can occur without the fundamental first step of radically improving our systematic approach to data collection and management. Perhaps this reality is what will ultimately drive EMR adoption among the nation's leading hospitals and clinics; those institutions that rise to the technical and operational challenges and invest in improved health IT will be rewarded by an elevated status and increased popularity that are likely to follow the federal money and national media spotlight.
Monday, July 6, 2009
Monday, March 9, 2009
Newt's Center for Health Transformation
I started writing this post a few months ago, and just found it in the 'unposted drafts' heap. Why not just put it out there?
Newt Gingrich's recent post on the National Review Online's "The Corner" is a mixture of good intention, fundamental ignorance, and conservative dogma. Gringrich, founder of the Center for Health Transformation, reminds his readers that "bureaucrats have tried health-care reform before without much success," and continues with a vapid, uninspired litany of what our health care system should be: mainly, one in which individuals don't get sick, doctors don't make mistakes, and the government does as little as possible. "Our goal," Gingrich writes, "should be to take back our money from the crooks who defraud the system, rather than taking it from the American taxpayers." Of course preventive and predictive medicine should be maximized, medical errors minimized, and fraud eliminated. Of course health care should be universally accessible, of the highest quality, and free for American citizens. But suggesting that these goals can be accomplished by individuals alone, without government support, demonstrates fundamental lack of understanding of the problem's magnitude and complexity, and an unabashed political dishonesty.
Newt Gingrich's recent post on the National Review Online's "The Corner" is a mixture of good intention, fundamental ignorance, and conservative dogma. Gringrich, founder of the Center for Health Transformation, reminds his readers that "bureaucrats have tried health-care reform before without much success," and continues with a vapid, uninspired litany of what our health care system should be: mainly, one in which individuals don't get sick, doctors don't make mistakes, and the government does as little as possible. "Our goal," Gingrich writes, "should be to take back our money from the crooks who defraud the system, rather than taking it from the American taxpayers." Of course preventive and predictive medicine should be maximized, medical errors minimized, and fraud eliminated. Of course health care should be universally accessible, of the highest quality, and free for American citizens. But suggesting that these goals can be accomplished by individuals alone, without government support, demonstrates fundamental lack of understanding of the problem's magnitude and complexity, and an unabashed political dishonesty.
To his credit, Gingrich acknowledges that health information technology is an important part of the health system improvement process. Also admirable is his emphasis on the patient's role in the systemic health care process, an often over-looked component of intervention efficiency assessment and prediction/prevention measures that are crucial to sustainable reform. I suppose Gingrich's Center for Health Transformation is an effort to address these needs without involving "bureaucrats" and "big government." The Center's website lists ambitious "metrics" of success, including "prevention of all medical errors" and "elimination of all preventable diabetes." How such sweeping change of this magnitude is achieved without nation-wide determination of and adherence to data-collection and intervention protocols or guidelines is, I guess, left to individuals and their will power. How individuals without medical educations are expected to make informed decisions about their care, without standardized data that attempt to compare available interventions, isn't addressed by the Center's efforts to "cut out the middle man." How the practice of medicine itself is supposed to progress from an intuitive process, in which error is inevitable, to a more precise, data-driven process, in which error is minimized, is ignored. To sum up Newt's message: it's not realistic for government to play a positive role in health care reform, but the Center for Health Transformation can "prevent all medical errors." Obviously, because politicians are human beings but doctors are gods. Right.
As much as I'm frustrated by the off-hand dismissal of any possibility that government can play a positive role in improving America's health care system, I do appreciate the Center for Health Transformation's emphasis on individual action. While I don't agree that "personal responsibility" to live healthier is the solution to any of the most problematic aspects of the broken U.S. health system (see Atul Gawande's recent New Yorker piece), I do believe that it is only by the united action of citizens that any significant social change can happen.
More on the connections between social activism/disobedience and technological innovation coming soon...
Thursday, March 5, 2009
Building Another Strawman: The Impact of Taxes on Entrepreneurship
The Massachusetts Institute of Technology and the Kauffman Foundation announced last week the results of a study, "Entrepreneurial Impact: The Role of MIT," according to which MIT entrepreneurs have created companies that "currently generate hundreds of billions of dollars and hundreds of thousands of jobs to regional economies." A less conservative, global estimate of these companies' annual world sales is estimated at $2 trillion, making the MIT "entrepreneurial ecosystem" the equivalent of the world's 11th-largest economy. Following announcement of this study, the belief that reinforced entrepreneurship will have significant positive impact on the American economy, and will play an important role in leading us out of the current recession, has picked up support in recent articles by Thomas Freidman (NY Times) and Reid Hoffman (Washington Post).
Distribution of federal money to a lightly regulated investment industry isn't likely (and for plenty of good reasons), but the general idea of stimulating entrepreneurship is a good one, and deserves serious consideration. Such efforts address immediate needs by providing jobs, but also put the United States in better position to meet the health care and energy challenges that threaten our future economy and overall well-being. Technological innovation, brought to life by entrepreneurs, is critical for health care cost reduction, expansion of quality care to more Americans, and development of sustainable energy alternatives. The recently announced Recovery and Reinvestment Act commits an impressive amount of money to scientific research and technology infrastructure, which is a great start, but we still need additional support, from government or elsewhere, of nascent ventures stuck in the "funding gap" between academic research and high-quality investment. Along these lines, J&J, Lilly, and other pharmas are partnering with universities and venture investors to build early-stage development programs and "accelerators" to capture technologies typically lost in the "valley of death" between initial scientific publications and progress through the early regulatory stages. Partners HealthCare, an integrated health system non-profit founded by Massachusetts General Hospital and Brigham and Women's Hospital, recently spun out the Partners Innovation Fund to address the same need. Even traditional venture firms recognize the need to readjust investment priorities in light of President Obama's commitment to health care reform (see Psilos Group's Albert Waxman recent post on The Health Care Blog, in which he identifies innovation as a key element of health care reform, and calls for increased action among venture investors in the health care space).
Still others have a different perspective of stimulus efforts, health care reform, and their impact on innovation. James Manzi of the City Journal wrote earlier this week that increased national spending is "bad news for American entrepreneurs." He argues that the increased income taxes needed to recover the expenditures will discourage potential entrepreneurs from kicking their start-ups into action. Manzi reasons that the "rational" entrepreneur will have to foresee higher odds of success in order to make up for the lost pay-off going to increased taxes. Unfortunately for those eager to jump on big government spending amidst economic crisis as anti-capitalist, Manzi's argument simply doesn't apply to any self-respecting entrepreneur. The reality is that entrepreneurs face such steep challenges and low probability of success at the outset of venture creation, especially if their ideas are worth anything, that whether they pay 39% instead of 36% in federal income tax, or 20% instead of 15% in capital gains, is hardly a consideration, and never a deal-breaker. Entrepreneurs start companies to build something new and make a meaningful contribution - this is the only way they succeed at any significant level, and the only way they are eventually financially rewarded for years of hard work with little pay and no guarantees. Arguing that concern over these kinds of tax increases will "squelch" entrepreneurship shows a fundamental misunderstanding of the entrepreneur.
Distribution of federal money to a lightly regulated investment industry isn't likely (and for plenty of good reasons), but the general idea of stimulating entrepreneurship is a good one, and deserves serious consideration. Such efforts address immediate needs by providing jobs, but also put the United States in better position to meet the health care and energy challenges that threaten our future economy and overall well-being. Technological innovation, brought to life by entrepreneurs, is critical for health care cost reduction, expansion of quality care to more Americans, and development of sustainable energy alternatives. The recently announced Recovery and Reinvestment Act commits an impressive amount of money to scientific research and technology infrastructure, which is a great start, but we still need additional support, from government or elsewhere, of nascent ventures stuck in the "funding gap" between academic research and high-quality investment. Along these lines, J&J, Lilly, and other pharmas are partnering with universities and venture investors to build early-stage development programs and "accelerators" to capture technologies typically lost in the "valley of death" between initial scientific publications and progress through the early regulatory stages. Partners HealthCare, an integrated health system non-profit founded by Massachusetts General Hospital and Brigham and Women's Hospital, recently spun out the Partners Innovation Fund to address the same need. Even traditional venture firms recognize the need to readjust investment priorities in light of President Obama's commitment to health care reform (see Psilos Group's Albert Waxman recent post on The Health Care Blog, in which he identifies innovation as a key element of health care reform, and calls for increased action among venture investors in the health care space).
Still others have a different perspective of stimulus efforts, health care reform, and their impact on innovation. James Manzi of the City Journal wrote earlier this week that increased national spending is "bad news for American entrepreneurs." He argues that the increased income taxes needed to recover the expenditures will discourage potential entrepreneurs from kicking their start-ups into action. Manzi reasons that the "rational" entrepreneur will have to foresee higher odds of success in order to make up for the lost pay-off going to increased taxes. Unfortunately for those eager to jump on big government spending amidst economic crisis as anti-capitalist, Manzi's argument simply doesn't apply to any self-respecting entrepreneur. The reality is that entrepreneurs face such steep challenges and low probability of success at the outset of venture creation, especially if their ideas are worth anything, that whether they pay 39% instead of 36% in federal income tax, or 20% instead of 15% in capital gains, is hardly a consideration, and never a deal-breaker. Entrepreneurs start companies to build something new and make a meaningful contribution - this is the only way they succeed at any significant level, and the only way they are eventually financially rewarded for years of hard work with little pay and no guarantees. Arguing that concern over these kinds of tax increases will "squelch" entrepreneurship shows a fundamental misunderstanding of the entrepreneur.
Our health care system relies on public servants and entrepreneurs to work together and realign cost-coverage-quality trade-offs. Our country needs entrepreneurs more than ever to create jobs and stimulate local economies. I believe our entrepreneurs will rise to these challenges. The calls of unmet need have driven American entrepreneurship for over two centuries, and I don't see why our current situation should be an exception. Those "entrepreneurs" who opt to sit on the sidelines and wait for better odds of "success" should consider a career change.
Monday, March 2, 2009
NICE Innovation
England's National Institute for Health and Clinical Excellence (NICE) announced last week that it has commissioned Professor Sir Ian Kennedy to conduct a study on 'valuing innovation.' Evidence for the report will consist of written submissions and information gathered from workshops with interested parties. How 'innovation' and 'value' are defined, measured, and related to each other will be the subjects of the study.
What this study reports should be instructive to the progress of U.S. health care policy for a couple reasons. For one, U.S. health reform efforts require systemic cost reduction and comparative effectiveness assessment of medical interventions in order for universal coverage to be affordable. An inevitable part of these processes is the evaluation of new medical technologies. How their 'value' is defined and measured is tricky business, and likely to upset more interest groups than it pleases. The NICE commission gives us a glimpse of what pitfalls lie ahead.
A second point of interest will be the NICE commission's definition of 'innovation' and assessment of its cost. Medical technology innovation is dominated by the United States, where much more money, researchers, and institutions are committed to the discovery and commercial development of novel diagnostics and therapies than anywhere else in the world. This fundamentally changes how the U.K. and the U.S. value innovation in their respective countries, because the U.K. (along with many other countries) eventually benefit from successful innovations without proportional contribution to the costs of necessary failures. It will be interesting to see if and how this is addressed in the NICE report.
In previous posts, I have argued that health technology innovation is essential for maintenance of and universal access to affordable, quality health care. I hope that innovation value studies such as NICE's, and others surely to follow, will be used to improve the efficiency of innovation, and not to fuel efforts that arrest innovation or limit its utility.
What this study reports should be instructive to the progress of U.S. health care policy for a couple reasons. For one, U.S. health reform efforts require systemic cost reduction and comparative effectiveness assessment of medical interventions in order for universal coverage to be affordable. An inevitable part of these processes is the evaluation of new medical technologies. How their 'value' is defined and measured is tricky business, and likely to upset more interest groups than it pleases. The NICE commission gives us a glimpse of what pitfalls lie ahead.
A second point of interest will be the NICE commission's definition of 'innovation' and assessment of its cost. Medical technology innovation is dominated by the United States, where much more money, researchers, and institutions are committed to the discovery and commercial development of novel diagnostics and therapies than anywhere else in the world. This fundamentally changes how the U.K. and the U.S. value innovation in their respective countries, because the U.K. (along with many other countries) eventually benefit from successful innovations without proportional contribution to the costs of necessary failures. It will be interesting to see if and how this is addressed in the NICE report.
In previous posts, I have argued that health technology innovation is essential for maintenance of and universal access to affordable, quality health care. I hope that innovation value studies such as NICE's, and others surely to follow, will be used to improve the efficiency of innovation, and not to fuel efforts that arrest innovation or limit its utility.
Friday, February 27, 2009
Thoughts on Regional Variation
The Office of Management and Budget's Peter Orszag tells us that the growing costs of our ailing health care system present the greatest long-term threat to the U.S. budget deficit. In the context of on-going economic, energy, and foreign affairs crises, such a claim should be loud enough to wake up the political sideliners and health reform obstructionists who assume or hope our country's health care crisis will somehow fix itself.
For those afraid that cost control necessitates government suffocation of technology innovation and "rationing" of valuable care, today's Health Populi post highlights a recent NEJM article (Fisher et al., 2009;NEJM 360(9):849-852) that promotes a more optimistic view of the road to affordable, universal health care. The study compares vastly different growth rates in per capita Medicare expenditures among U.S. cities with, presumably, equal access to medical technology. Instead of blaming technology for increased cost growth from 1992 to 2006 in cities like Miami, FL (5.0%) and East Long Island, NY (4.0%) versus that in Salem, OR (2.3%), the authors found that regional differences were highly correlated with differences in physician propensity to recommend discretionary services in clinical "gray areas" (e.g., subspecialist referrals for common, low-risk symptoms such as typical gastroesophageal reflux). Because increased expenditure growth from city to city fails to correlate with any measure of improved health, the take-home message of the report is that comparative studies between high-cost, high-growth regions and low-cost, low-growth regions can influence policy that encourages the former to behave more like the latter, without reasonable fear of a subsequent fall in care quality and health.
The regional differences in health care cost efficiency have been noted before - see, for example, 2006 papers by David Cutler ("Making Sense of Medical Technology") and Jonathan Skinner et al. ("Is Technological Change in Medicine Always Worth It?"). However, the important data uncovered by the recent NEJM article indicate that "technology" and "payment systems" are insufficient explanations of regional spending differences, as all populations in the study have access to the same technologies, and are all in the fee-for-service system). What the study does not analyze is correlation of regional spending with other factors, such as prevalence of medical malpractice reports, physician work-load, patient education, or other information that might provide explanations for regional differences in physician behavior. And with these and other unknown cost-of-care determinants comes the necessity of government help.
Individual physician leadership in medical practices, communities, and the broader health care system will go a long way in improving the efficiency of care, but without data-driven guidelines based on comparative cost-efficacy measurements, there can be no unified progress toward improved, affordable care. Physicians and policy makers can work together to assure the right information is collected and properly acted upon. But, ultimately, if we wish to provide sustained, quality, universal care, we need fundamental and comprehensive payment reform through which payers and providers are accountable for costs, but incentivized to keep more patients healthy.
For those afraid that cost control necessitates government suffocation of technology innovation and "rationing" of valuable care, today's Health Populi post highlights a recent NEJM article (Fisher et al., 2009;NEJM 360(9):849-852) that promotes a more optimistic view of the road to affordable, universal health care. The study compares vastly different growth rates in per capita Medicare expenditures among U.S. cities with, presumably, equal access to medical technology. Instead of blaming technology for increased cost growth from 1992 to 2006 in cities like Miami, FL (5.0%) and East Long Island, NY (4.0%) versus that in Salem, OR (2.3%), the authors found that regional differences were highly correlated with differences in physician propensity to recommend discretionary services in clinical "gray areas" (e.g., subspecialist referrals for common, low-risk symptoms such as typical gastroesophageal reflux). Because increased expenditure growth from city to city fails to correlate with any measure of improved health, the take-home message of the report is that comparative studies between high-cost, high-growth regions and low-cost, low-growth regions can influence policy that encourages the former to behave more like the latter, without reasonable fear of a subsequent fall in care quality and health.
The regional differences in health care cost efficiency have been noted before - see, for example, 2006 papers by David Cutler ("Making Sense of Medical Technology") and Jonathan Skinner et al. ("Is Technological Change in Medicine Always Worth It?"). However, the important data uncovered by the recent NEJM article indicate that "technology" and "payment systems" are insufficient explanations of regional spending differences, as all populations in the study have access to the same technologies, and are all in the fee-for-service system). What the study does not analyze is correlation of regional spending with other factors, such as prevalence of medical malpractice reports, physician work-load, patient education, or other information that might provide explanations for regional differences in physician behavior. And with these and other unknown cost-of-care determinants comes the necessity of government help.
Individual physician leadership in medical practices, communities, and the broader health care system will go a long way in improving the efficiency of care, but without data-driven guidelines based on comparative cost-efficacy measurements, there can be no unified progress toward improved, affordable care. Physicians and policy makers can work together to assure the right information is collected and properly acted upon. But, ultimately, if we wish to provide sustained, quality, universal care, we need fundamental and comprehensive payment reform through which payers and providers are accountable for costs, but incentivized to keep more patients healthy.
Wednesday, February 25, 2009
Technology in Health Care: Reconsidering the "Wasteful" and "Unnecessary"
I think it's time for expert and amateur commentators of health care reform to get more specific about "wasteful" and "unnecessary" health care spending. What, exactly, is waste in the context of human care? Where do we find it? How do we extract it from our health system? Medical care is currently too expensive to achieve high-quality, universal care, so there is little doubt among reputable economists and health policy experts that overall cost reduction must accompany efforts to expand coverage and accessibility. Fortunately, the Obama Administration's first steps toward health care reform suggest an understanding that science and technology are not necessarily the sources of "wasteful" or "unnecessary" care, but rather the tools with which we can increase efficiency of care and reduce costs.
Medical technology is often identified as a primary source of overspending in our health care system because it is estimated to have contributed to 50% of recent growth in health care spending. A problem here is that the growth in health care spending has become synonymous with the excessive and the wasteful in health care spending. Economists and other commentators argue that we must cut out unnecessary costs by targeting the drivers of cost growth. This is faulty logic that, if acted upon, could be disastrous. Viewing the progress of innovative technologies under this lens of cost reduction is precisely upside-down. Not only do attempts to control adoption and use of innovative medical technology carry severe, unintended consequences for the overall quality of health care, but incentive-directed technological innovations, directed toward hospital and physician care cost reduction, can substantially reduce overall costs in the near-mid-term, while assuring improved quality in the long-term.
Technological innovation is inseparable from the cost-coverage trade-off in health care because it plays a common role in comprehensive data collection and efficient information consolidation and management; together, these lead to systemic cost control and allow sustainable expansion of coverage. President Obama's early action to invest in the collection and management of health data and information is an important first step in moving medical care to a more efficient, precise process that is better for payer, provider, and patient.
Medical technology is often identified as a primary source of overspending in our health care system because it is estimated to have contributed to 50% of recent growth in health care spending. A problem here is that the growth in health care spending has become synonymous with the excessive and the wasteful in health care spending. Economists and other commentators argue that we must cut out unnecessary costs by targeting the drivers of cost growth. This is faulty logic that, if acted upon, could be disastrous. Viewing the progress of innovative technologies under this lens of cost reduction is precisely upside-down. Not only do attempts to control adoption and use of innovative medical technology carry severe, unintended consequences for the overall quality of health care, but incentive-directed technological innovations, directed toward hospital and physician care cost reduction, can substantially reduce overall costs in the near-mid-term, while assuring improved quality in the long-term.
Technological innovation is inseparable from the cost-coverage trade-off in health care because it plays a common role in comprehensive data collection and efficient information consolidation and management; together, these lead to systemic cost control and allow sustainable expansion of coverage. President Obama's early action to invest in the collection and management of health data and information is an important first step in moving medical care to a more efficient, precise process that is better for payer, provider, and patient.
Outlining a Case for Health Technology Innovation
Introduction
The unsustainable growth of U.S. health care costs and uninsured individuals is well documented [1-4], and is a harbinger of a health system crisis that could prolong economic distress, leave unprecedented numbers of Americans unhealthy and uncared for, and bring our country to its highest levels of vulnerability in modern history. Approximately 20,000 Americans die every year because they lack health insurance, and the percentage of our population without insurance is growing at twice the rate of the overall population growth [5]. Nearly 50 million Americans are currently uninsured, and by 2030, the rising cost of Medicare will crowd out all other federal government spending except defense [6,7]. But the American people are ready for change. They now know, first-hand, that the United States is not immune to systemic failure, that real problems require timely solutions, and that fear does not justify irresponsibility or shield us from its consequences. For the first time since the inception of Medicare and Medicaid in 1965, we are powerfully aligned for reform. How we integrate the development of data collection and innovative medical technologies into our plan will determine its eventual success.
Cost vs. Coverage and the Role of Innovation
Appreciation of cost-coverage trade-offs in our health care system is central to any reform effort [12]. America’s appetite for medical technology is estimated to account for 50% of the observed growth in health care costs [2,9], and, therefore, is a target for cost-control efforts [e.g., 10]. Health care economists targeting medical technology focus on assessing “efficiency” and determining cut-off values below which a medical intervention is considered “wasteful.” However, these efforts largely fail to confront the unclear methodology and ethical ambiguity concerning “waste” determination in the context of patient care [11], studies suggesting that investment in medical technology provides good value on average [4], and data indicating that growth in prescription drug spending has decreased since 2003 [12]. Moreover, such approaches antagonize the medical technology industry and raise concern among citizens who fear losing access to interventions that are clinically meaningful despite “waste” or “inefficiency,” creating serious resistance to political efforts at reform.
Certainly, medical technology contributes substantially to the growth in health care costs, and there is room for improvement in medical technology diffusion and its cost-benefit profile. Viewing the progress of innovative technologies under this lens of cost reduction, however, is precisely upside-down. Not only do attempts to control adoption and use of innovative medical technology carry dire consequences for the overall quality of health care, but incentive-directed technological innovations, directed toward hospital cost reduction, can substantially reduce overall costs in the near-mid-term, while assuring improved quality in the long-term. Technological innovation is inseparable from the cost-coverage trade-off in health care because it plays a common role in comprehensive data collection and efficient information consolidation and management; together, these lead to systemic cost control and allow sustainable expansion of coverage. This paper focuses on the role of innovation in reducing hospital and health professional expenditures, with specific reference to disruptive medical technologies and the importance of health information technology and comparative effectiveness in accelerating cost
control. By investing in innovative medical technology in the ways discussed below, we will be able to identify particularized needs of larger segments of patients and route them to the resources that would offer the best and most cost-effective treatment, thereby reducing costs, improving quality of care, and creating a sustainable path toward universal coverage.
Cost-Reduction Applications of Technological Innovation
Improved diagnosis is a particularly important application of innovative technology with cost-saving sequelae. Misdiagnosis alone contributes to massive, avoidable health care costs. Advances in diagnostics lead to increased treatment efficacy, but also allow diffusion of common care of acute, manageable disease away from expensive hospital systems and toward clinics, doctors’ offices, and eventually to patients’ homes [13]. This frees hospitals to focus on processes that maximize the value of a doctor’s specialized training and skill set. David Cutler and colleagues note that “the national focus on the rise of medical spending should be balanced by attention to the health benefits of this increased spending” [4]. Although increases in medical spending have generally provided “good value,” spending increases in care for the elderly and the chronically ill has yielded smaller “years of life” gains. Such differences can be largely accounted for when the competencies of the modern hospital with respect to the patient population is considered: hospitals and their associated professionals are adept and efficient at highly-specialized problem-solving and acute procedure performance, but are terribly inefficient with respect to care for elderly or chronically ill patients. The ability of technological innovation to facilitate transfer of chronic care to settings capable of more efficient patient management is worthy of attention and concerted action.
Information technology plays a complementary role in its ability to reduce hospital and overall health system administrative costs, allow for more comprehensive and continuous patient monitoring, and increase clinical trial efficiency. The estimated cost savings of converting medical claims-related transactions from paper to digital carry an estimated cost savings of $30 billion [14]. More importantly, the transition to electronic health records, with recent support in the American Recovery and Reinvestment Act, takes a step toward continuous patient care, from birth to death, at a level of quality not possible with paper records. Going one step further, the combination of medical data and appropriate technology innovations allows medical professionals to progress from data and information that inform empirical or evidence-based decisions, to knowledge and intelligence that lead to the best possible care.
Comparative effectiveness is an important part of the new administration’s health care policy, and is absolutely necessary to achieve the best possible care for all Americans. Our culture of medical care must embrace data-driven medical decisions, because there is no meaningful patient and physician choice if neither is fully informed of the actual, empirical efficacy of available treatments. The work of Don Berwick at the Institute for Healthcare Improvement provides promise that physicians and their patients, armed with comparative
performance data, can work together to improve quality of care [15]. A major challenge in quality comparison analyses is how to properly use the data collected. Heterogeneous patient populations and complex disease profiles make it difficult to compare the overall effectiveness of therapeutic interventions. Today there are eighty-nine varieties of leukemia and lymphoma, compared with only five known types fifty years ago [13]. Similarly, diabetes is now understood to be a collection of related disorders, and not the single disease it was believed to be decades ago. Inflammatory bowel disease was assumed by a previous generation of physicians to be a psychiatric disorder. Each of these cases warns that partial understanding of a disease, or group of similar diseases, can undermine our attempts to assess treatment effectiveness and measure its value. Better health information technology and continued development of innovative diagnostics will improve understanding of disease and patient responses to treatments, and, therefore, increase the disease populations to which comparative effectiveness data can be intelligently applied.
Hospital Care Expenditures
Hospital care and physician and clinical service expenditures comprise over 50% of the nation’s total health care costs. Though an increasing portion of hospital care dollars are spent on technology that has yet to undergo cost-benefit assessment, substantial hospital expenditures result from high-volume or high-cost procedures that could be done equally effectively or better, but cheaper, with increased investment in innovative technologies [see 16]. Further hospital care spending increases are due to increased demands of hospital management of prevalent chronic diseases that hospitals are ill-equipped to provide. For instance, obesityrelated disorders are, in most cases, better managed by a reinforced primary care infrastructure before they result in acute emergency response or chronic care at the hospital level. A physician’s obligation to her patients and to her profession’s ethical codes, in many cases, drives her to proceed with a less-thanoptimal test or intervention so long as it is safe, even if there is questionable likelihood of it yielding important medical information. Given present understanding of human disease, the development of innovative technology to address the above hospital care challenges is a more feasible way to address growing health care costs than are efforts to convince or mandate physicians to avoid “wasteful” medical interventions. Instead, incentivizing academic researchers and start-up companies to develop lower-cost ways to achieve the goals of common, high-volume hospital procedures outside of the hospital leads to sustainable cost-saving at the hospital level, and immediate job creation at the start-up company level. Coupling this initiative with the development of technology that improves diagnostic methods, data collection and management as discussed above will help shift management and treatment of certain patient segments away from hospitals to other areas of the health care system where they are better and more cost-effectively served.
Criticisms of Technology-Aided Cost Reduction
Economist Henry Aaron claims that “rapid scientific advance always raises expenditures, even if it lowers prices” [17]. Indeed, history is replete with examples of massive technological advance that drive total outlay increase despite lowering cost (e.g., automobiles, airplanes, television, computers); the cost per capita is reduced, but overall expenditures increase because of essentially infinite increase in new adopters. Health care technology can defy this rule for several reasons. First, individuals contribute to health care expenditures regardless of their insurance status, in the form of taxes, reduced income, and higher prices [18]. The precise goal in providing universal health care, therefore, is to reduce the overall cost per person, which would simultaneously reduce overall expenditures. Second, while new medical technologies sometimes do introduce complements to what already exists, more often they replace entire sets of older methods, or procedures, or technologies, pruning out less effective, more expensive predecessors and/or obviating the need for multiple, serial intervention attempts. Examples from the care of diabetes and breast cancer demonstrate that such innovations tend to move a field from highly variable intuitive medicine to more efficient precision medicine [13,19]. Moreover, typical examples of technologies that drive expenditure increase in medicine (e.g., cardiovascular disease interventions) are innovations that meet significant need; though these exceptions do increase overall expenditures, addressing our cost problem by ex ante impeding development of life-saving or life-improving technology is both politically and practically unfeasible. Finally, advances in health care technology can reduce the uncertainty or volatility of the diagnostic/therapeutic process to maximize the value of health professionals’ time. Thus, though a novel technology, in an isolated context, might increase expenditures, it can still drive overall cost reduction in a clinical setting by minimizing demands on expensive health professionals.
Conclusion
The role of science and technology innovation in health care reform is crucial to successful efforts to improve the accessibility and affordability of health care without compromising immediate and future quality. The recent American Recovery and Reinvestment Act will provide $15 billion for basic science and $50 billion to upgrade America’s technology infrastructure, which will work immediately to provide jobs and a foundation for a stabilized economy. Equally importantly, it will help facilitate discoveries that will address human health problems. This commitment toward health science innovation must remain strong in the battle for health care reform. The movement for a stronger health system is fueled by the conviction of committed leadership and a motivated constituency, a sound intellectual agenda, and the necessary call for shared responsibility. Technological innovation will continually change health care definitions, mores, and ideas of how it is best delivered [20]. Accepting the responsibility of universal coverage and the value of information collection, analysis, and distribution will take us steps closer to the next revolutionary health care reform.
References
1. National Health Expenditures Accounts. Baltimore: Centers for Medicare and Medicaid
Services, 2005.
2. Newhouse JP. Medical Care Costs: How Much Welfare Loss? J Econ Perspect 1992; 6:3-29
3. Bodenheimer T. High and Rising Health Care Costs. Part 1: Seeking an Explanation. Ann
Intern Med 2005; 142:847-854.
4. Cutler DM, Rosen AB, Vijan S. The Value of Medical Spending in the United States, 1960-
2000. NEJM 355(9):920-927.
5. Cutler DM, Wilensky GR. Perspective Roundtable: Health Care in the Next Administration.
NEJM 2008; 359(15):1-16.
6. Health Care Costs: A Primer, Kaiser Family Foundation, August 2007.
7. David Walker, 60 Minutes interview. July 8, 2007
(http://www.cbsnews.com/stories/2007/03/01/60minutes/main2528226.shtml)
8. Emanuel EJ. The Cost-Coverage Trade-Off. JAMA 2008; 299(8):947-949.
9. Cutler DM, McClellan M. Is Technological Change in Medicine Worth It? Health Affairs
2001; 20(5):11-29.
10. Bodenheimer T. High and Rising Health Care Costs. Part 2: Technologic Innovation. Ann
Intern Med 2005; 142:932-937.
11. Aaron, HJ. Waste, We Know You Are Out There. NEJM 2008; 359(18):1865-1867.
12. Aitken M, Berndt ER, Cutler DM. Prescription Drug Spending Trends in the United States:
Looking Beyond the Turning Point. Health Affairs 2009; 28(1):w151-w160.
13. Christensen CM, Grossman JH, Hwang J, The Innovator’s Prescription (New York:
McGraw Hill, 2009).
14. U.S. Healthcare Efficiency Index. http://ushealthcareindex.com.
15. Gawande A, Better (New York: Picador (Henry Holt and Company), 2007).
16. Wells PNT. Can Technology Truly Reduce Healthcare Costs? IEEE Engineering in
Medicine and Biology Magazine. January/February, 2003.
17. Aaron HJ. The Unsurprising Surprise of Renewed Health Care Cost Inflation. Health Affairs
2002. Suppl Web Exclusives:W85-87.
18. Emanuel EJ, Fuchs VR. Who Really Pays for Health Care? JAMA 2008; 299(9):1057-1059.
19. Hwang J, Christensen CM. Disruptive Innovation in Health Care Delivery: A Framework for
Business-Model Innovation. Health Affairs 2007; 27(5):1329-1335.
20. Aaron HJ. The Pitfalls of Overreaching in Health Reform. Health Affairs 2009; 28(2):w184-
187.
21. Centers for Medicare and Medicaid Services (2006), Office of the Actuary, National Health
Statistics Group.
The unsustainable growth of U.S. health care costs and uninsured individuals is well documented [1-4], and is a harbinger of a health system crisis that could prolong economic distress, leave unprecedented numbers of Americans unhealthy and uncared for, and bring our country to its highest levels of vulnerability in modern history. Approximately 20,000 Americans die every year because they lack health insurance, and the percentage of our population without insurance is growing at twice the rate of the overall population growth [5]. Nearly 50 million Americans are currently uninsured, and by 2030, the rising cost of Medicare will crowd out all other federal government spending except defense [6,7]. But the American people are ready for change. They now know, first-hand, that the United States is not immune to systemic failure, that real problems require timely solutions, and that fear does not justify irresponsibility or shield us from its consequences. For the first time since the inception of Medicare and Medicaid in 1965, we are powerfully aligned for reform. How we integrate the development of data collection and innovative medical technologies into our plan will determine its eventual success.
Cost vs. Coverage and the Role of Innovation
Appreciation of cost-coverage trade-offs in our health care system is central to any reform effort [12]. America’s appetite for medical technology is estimated to account for 50% of the observed growth in health care costs [2,9], and, therefore, is a target for cost-control efforts [e.g., 10]. Health care economists targeting medical technology focus on assessing “efficiency” and determining cut-off values below which a medical intervention is considered “wasteful.” However, these efforts largely fail to confront the unclear methodology and ethical ambiguity concerning “waste” determination in the context of patient care [11], studies suggesting that investment in medical technology provides good value on average [4], and data indicating that growth in prescription drug spending has decreased since 2003 [12]. Moreover, such approaches antagonize the medical technology industry and raise concern among citizens who fear losing access to interventions that are clinically meaningful despite “waste” or “inefficiency,” creating serious resistance to political efforts at reform.
Certainly, medical technology contributes substantially to the growth in health care costs, and there is room for improvement in medical technology diffusion and its cost-benefit profile. Viewing the progress of innovative technologies under this lens of cost reduction, however, is precisely upside-down. Not only do attempts to control adoption and use of innovative medical technology carry dire consequences for the overall quality of health care, but incentive-directed technological innovations, directed toward hospital cost reduction, can substantially reduce overall costs in the near-mid-term, while assuring improved quality in the long-term. Technological innovation is inseparable from the cost-coverage trade-off in health care because it plays a common role in comprehensive data collection and efficient information consolidation and management; together, these lead to systemic cost control and allow sustainable expansion of coverage. This paper focuses on the role of innovation in reducing hospital and health professional expenditures, with specific reference to disruptive medical technologies and the importance of health information technology and comparative effectiveness in accelerating cost
control. By investing in innovative medical technology in the ways discussed below, we will be able to identify particularized needs of larger segments of patients and route them to the resources that would offer the best and most cost-effective treatment, thereby reducing costs, improving quality of care, and creating a sustainable path toward universal coverage.
Cost-Reduction Applications of Technological Innovation
Improved diagnosis is a particularly important application of innovative technology with cost-saving sequelae. Misdiagnosis alone contributes to massive, avoidable health care costs. Advances in diagnostics lead to increased treatment efficacy, but also allow diffusion of common care of acute, manageable disease away from expensive hospital systems and toward clinics, doctors’ offices, and eventually to patients’ homes [13]. This frees hospitals to focus on processes that maximize the value of a doctor’s specialized training and skill set. David Cutler and colleagues note that “the national focus on the rise of medical spending should be balanced by attention to the health benefits of this increased spending” [4]. Although increases in medical spending have generally provided “good value,” spending increases in care for the elderly and the chronically ill has yielded smaller “years of life” gains. Such differences can be largely accounted for when the competencies of the modern hospital with respect to the patient population is considered: hospitals and their associated professionals are adept and efficient at highly-specialized problem-solving and acute procedure performance, but are terribly inefficient with respect to care for elderly or chronically ill patients. The ability of technological innovation to facilitate transfer of chronic care to settings capable of more efficient patient management is worthy of attention and concerted action.
Information technology plays a complementary role in its ability to reduce hospital and overall health system administrative costs, allow for more comprehensive and continuous patient monitoring, and increase clinical trial efficiency. The estimated cost savings of converting medical claims-related transactions from paper to digital carry an estimated cost savings of $30 billion [14]. More importantly, the transition to electronic health records, with recent support in the American Recovery and Reinvestment Act, takes a step toward continuous patient care, from birth to death, at a level of quality not possible with paper records. Going one step further, the combination of medical data and appropriate technology innovations allows medical professionals to progress from data and information that inform empirical or evidence-based decisions, to knowledge and intelligence that lead to the best possible care.
Comparative effectiveness is an important part of the new administration’s health care policy, and is absolutely necessary to achieve the best possible care for all Americans. Our culture of medical care must embrace data-driven medical decisions, because there is no meaningful patient and physician choice if neither is fully informed of the actual, empirical efficacy of available treatments. The work of Don Berwick at the Institute for Healthcare Improvement provides promise that physicians and their patients, armed with comparative
performance data, can work together to improve quality of care [15]. A major challenge in quality comparison analyses is how to properly use the data collected. Heterogeneous patient populations and complex disease profiles make it difficult to compare the overall effectiveness of therapeutic interventions. Today there are eighty-nine varieties of leukemia and lymphoma, compared with only five known types fifty years ago [13]. Similarly, diabetes is now understood to be a collection of related disorders, and not the single disease it was believed to be decades ago. Inflammatory bowel disease was assumed by a previous generation of physicians to be a psychiatric disorder. Each of these cases warns that partial understanding of a disease, or group of similar diseases, can undermine our attempts to assess treatment effectiveness and measure its value. Better health information technology and continued development of innovative diagnostics will improve understanding of disease and patient responses to treatments, and, therefore, increase the disease populations to which comparative effectiveness data can be intelligently applied.
Hospital Care Expenditures
Hospital care and physician and clinical service expenditures comprise over 50% of the nation’s total health care costs. Though an increasing portion of hospital care dollars are spent on technology that has yet to undergo cost-benefit assessment, substantial hospital expenditures result from high-volume or high-cost procedures that could be done equally effectively or better, but cheaper, with increased investment in innovative technologies [see 16]. Further hospital care spending increases are due to increased demands of hospital management of prevalent chronic diseases that hospitals are ill-equipped to provide. For instance, obesityrelated disorders are, in most cases, better managed by a reinforced primary care infrastructure before they result in acute emergency response or chronic care at the hospital level. A physician’s obligation to her patients and to her profession’s ethical codes, in many cases, drives her to proceed with a less-thanoptimal test or intervention so long as it is safe, even if there is questionable likelihood of it yielding important medical information. Given present understanding of human disease, the development of innovative technology to address the above hospital care challenges is a more feasible way to address growing health care costs than are efforts to convince or mandate physicians to avoid “wasteful” medical interventions. Instead, incentivizing academic researchers and start-up companies to develop lower-cost ways to achieve the goals of common, high-volume hospital procedures outside of the hospital leads to sustainable cost-saving at the hospital level, and immediate job creation at the start-up company level. Coupling this initiative with the development of technology that improves diagnostic methods, data collection and management as discussed above will help shift management and treatment of certain patient segments away from hospitals to other areas of the health care system where they are better and more cost-effectively served.
Criticisms of Technology-Aided Cost Reduction
Economist Henry Aaron claims that “rapid scientific advance always raises expenditures, even if it lowers prices” [17]. Indeed, history is replete with examples of massive technological advance that drive total outlay increase despite lowering cost (e.g., automobiles, airplanes, television, computers); the cost per capita is reduced, but overall expenditures increase because of essentially infinite increase in new adopters. Health care technology can defy this rule for several reasons. First, individuals contribute to health care expenditures regardless of their insurance status, in the form of taxes, reduced income, and higher prices [18]. The precise goal in providing universal health care, therefore, is to reduce the overall cost per person, which would simultaneously reduce overall expenditures. Second, while new medical technologies sometimes do introduce complements to what already exists, more often they replace entire sets of older methods, or procedures, or technologies, pruning out less effective, more expensive predecessors and/or obviating the need for multiple, serial intervention attempts. Examples from the care of diabetes and breast cancer demonstrate that such innovations tend to move a field from highly variable intuitive medicine to more efficient precision medicine [13,19]. Moreover, typical examples of technologies that drive expenditure increase in medicine (e.g., cardiovascular disease interventions) are innovations that meet significant need; though these exceptions do increase overall expenditures, addressing our cost problem by ex ante impeding development of life-saving or life-improving technology is both politically and practically unfeasible. Finally, advances in health care technology can reduce the uncertainty or volatility of the diagnostic/therapeutic process to maximize the value of health professionals’ time. Thus, though a novel technology, in an isolated context, might increase expenditures, it can still drive overall cost reduction in a clinical setting by minimizing demands on expensive health professionals.
Conclusion
The role of science and technology innovation in health care reform is crucial to successful efforts to improve the accessibility and affordability of health care without compromising immediate and future quality. The recent American Recovery and Reinvestment Act will provide $15 billion for basic science and $50 billion to upgrade America’s technology infrastructure, which will work immediately to provide jobs and a foundation for a stabilized economy. Equally importantly, it will help facilitate discoveries that will address human health problems. This commitment toward health science innovation must remain strong in the battle for health care reform. The movement for a stronger health system is fueled by the conviction of committed leadership and a motivated constituency, a sound intellectual agenda, and the necessary call for shared responsibility. Technological innovation will continually change health care definitions, mores, and ideas of how it is best delivered [20]. Accepting the responsibility of universal coverage and the value of information collection, analysis, and distribution will take us steps closer to the next revolutionary health care reform.
References
1. National Health Expenditures Accounts. Baltimore: Centers for Medicare and Medicaid
Services, 2005.
2. Newhouse JP. Medical Care Costs: How Much Welfare Loss? J Econ Perspect 1992; 6:3-29
3. Bodenheimer T. High and Rising Health Care Costs. Part 1: Seeking an Explanation. Ann
Intern Med 2005; 142:847-854.
4. Cutler DM, Rosen AB, Vijan S. The Value of Medical Spending in the United States, 1960-
2000. NEJM 355(9):920-927.
5. Cutler DM, Wilensky GR. Perspective Roundtable: Health Care in the Next Administration.
NEJM 2008; 359(15):1-16.
6. Health Care Costs: A Primer, Kaiser Family Foundation, August 2007.
7. David Walker, 60 Minutes interview. July 8, 2007
(http://www.cbsnews.com/stories/2007/03/01/60minutes/main2528226.shtml)
8. Emanuel EJ. The Cost-Coverage Trade-Off. JAMA 2008; 299(8):947-949.
9. Cutler DM, McClellan M. Is Technological Change in Medicine Worth It? Health Affairs
2001; 20(5):11-29.
10. Bodenheimer T. High and Rising Health Care Costs. Part 2: Technologic Innovation. Ann
Intern Med 2005; 142:932-937.
11. Aaron, HJ. Waste, We Know You Are Out There. NEJM 2008; 359(18):1865-1867.
12. Aitken M, Berndt ER, Cutler DM. Prescription Drug Spending Trends in the United States:
Looking Beyond the Turning Point. Health Affairs 2009; 28(1):w151-w160.
13. Christensen CM, Grossman JH, Hwang J, The Innovator’s Prescription (New York:
McGraw Hill, 2009).
14. U.S. Healthcare Efficiency Index. http://ushealthcareindex.com.
15. Gawande A, Better (New York: Picador (Henry Holt and Company), 2007).
16. Wells PNT. Can Technology Truly Reduce Healthcare Costs? IEEE Engineering in
Medicine and Biology Magazine. January/February, 2003.
17. Aaron HJ. The Unsurprising Surprise of Renewed Health Care Cost Inflation. Health Affairs
2002. Suppl Web Exclusives:W85-87.
18. Emanuel EJ, Fuchs VR. Who Really Pays for Health Care? JAMA 2008; 299(9):1057-1059.
19. Hwang J, Christensen CM. Disruptive Innovation in Health Care Delivery: A Framework for
Business-Model Innovation. Health Affairs 2007; 27(5):1329-1335.
20. Aaron HJ. The Pitfalls of Overreaching in Health Reform. Health Affairs 2009; 28(2):w184-
187.
21. Centers for Medicare and Medicaid Services (2006), Office of the Actuary, National Health
Statistics Group.
Subscribe to:
Comments (Atom)
