September 15, 2013


The Costly Paradox of Health-Care Technology (Jonathan S. Skinner, September 5, 2013, MIT Technology Review)

Unlike many countries, the U.S. pays for nearly any technology (and at nearly any price) without regard to economic value. This is why, since 1980, health-care spending as a percentage of gross domestic product has grown nearly three times as rapidly in the United States as it has in other developed countries, while the nation has lagged behind in life-expectancy gains.

Other researchers have found that just 0.5 percent of studies on new medical technologies evaluated those that work just as well as existing ones but cost less. The nearly complete isolation of both physicians and patients from the actual prices paid for treatments ensures a barren ground for these types of ideas. Why should a patient, fully covered by health insurance, worry about whether that expensive hip implant is really any better than the alternative costing half as much? And for that matter, physicians rarely if ever know the cost of what they prescribe--and are often shocked when they do find out.

The implications for innovation policy are twofold. First, we should pay only for innovations that are worth it, but without shutting out the potential for shaky new ideas that might have long-term potential. Two physicians, Steven Pearson and Peter Bach, have suggested a middle ground, where Medicare would cover such innovations for, say, three years; then, if there is still no evidence of effectiveness, Medicare would revert to paying for the standard treatment. Like many rational ideas, this one may fall victim to the internecine political struggles in Washington, D.C., where it's controversial to suggest denying even unproven treatments for dying patients.

For this reason, the best way technology can save costs is if it is used to better organize the health-care system. While the U.S. may lead the world in developing costly new orthopedic prostheses, we're far behind in figuring out how to get treatments to patients who want and could actually benefit from them. Doing so requires a greater emphasis on organizational change, innovations in the science of health-care delivery, and transparent prices to provide the right encouragement. This means smartphone diagnostics, technology to help physicians and nurses deliver the highest-quality care, or even drug container caps with motion detectors that let a nurse know when the patient hasn't taken the daily dose. The overall benefits from innovation in health-care delivery could far exceed those arising from dozens of shiny new medical devices.

Posted by at September 15, 2013 7:56 PM

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