Purchasing Medical Innovation

Purchasing Medical Innovation: The Right Technology, for the Right Patient, at the Right Price

James C. Robinson
Copyright Date: 2015
Edition: 1
Pages: 184
https://www.jstor.org/stable/10.1525/j.ctt13x1h5v
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  • Book Info
    Purchasing Medical Innovation
    Book Description:

    Innovation in medical technology generates a remarkable supply of new drugs, devices, and diagnostics that improve health, reduce risks, and extend life. But these technologies are too often used on the wrong patient, in the wrong setting, or at an unaffordable price. The only way to moderate the growth in health care costs without undermining the dynamic of medical innovation is to improve the process of assessing, pricing, prescribing, and using new technologies.Purchasing Medical Innovationanalyzes the contemporary revolution in the purchasing of health care technology, with a focus on the roles of the Food and Drug Administration (FDA), Medicare and private health insurers, physicians and hospitals, and consumers themselves. The FDA is more thoroughly assessing product performance under real-world conditions as well as in laboratory settings, accelerating the path to market for breakthroughs while imposing use controls on risky products. Insurers are improving their criteria for coverage and designing payment methods that reward efficiency in the selection of new treatments. Hospitals are aligning adoption of complex supplies and equipment more closely with physicians' preferences for the best treatment for their patients. Consumers are becoming more engaged and financially accountable for their health care choices. This book describes both the strengths and deficiencies of the current system of purchasing and highlights opportunities for buyers, sellers, and users to help improve the value of medical technology: better outcomes at lower cost.

    eISBN: 978-0-520-96081-7
    Subjects: Business, Health Sciences

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Illustrations
    (pp. vii-viii)
  4. ACKNOWLEDGMENTS
    (pp. ix-x)
  5. INTRODUCTION
    (pp. 1-18)

    Innovation in medical technology is the engine that drives the health care system. What can be done for patients today is radically different from what could be done ten or twenty years ago, to say nothing of what went under the name of medicine in earlier years. Tremendous progress has been made in the treatment of formerly intractable conditions such as arthritis, heart disease, breast cancer, spinal deformities, and multiple sclerosis. Severely diseased coronary valves can be replaced by artificial implants delivered surgically or by catheters threaded through the body’s major arteries. Replacement of diseased joints is done quicker, more...

  6. 1 Regulatory Access to the Market
    (pp. 19-40)

    Patients want therapies that are safe and effective, yet the nation has all too much experience with treatments that poison the patient and with nostrums that do nothing at all. The US Food and Drug Administration (FDA) was established originally to protect consumers from tainted foods, but has seen its scope of authority expand to encompass pharmaceuticals, biologics, implantable devices, laboratory tests, diagnostic imaging, and radiation therapy. New products must obtain authorization from the agency prior to being made available for sale. The FDA’s product label specifies the clinical indications for which the product can be marketed to physicians and,...

  7. 2 Insurance Coverage and Reimbursement
    (pp. 41-58)

    Patients may use any FDA-approved therapy prescribed by any physician, if they are willing to pay with their own money. As a practical matter, however, most new tests and treatments will be used only if their costs are covered by health insurance. Insurance expands access to valuable medical technologies, thereby promoting health and reducing disability, but it also accelerates the growth in spending. Insured patients use more services, and shop less carefully, than do patients who pay with their own money. Insurers pass the costs from this greater medical use and price on to the governmental programs, private employers, and...

  8. 3 Methods of Payment for Medical Technology
    (pp. 59-78)

    The US health care system has historically paid separately for each test, treatment, procedure, and patient visit to a physician or hospital. Payment for knee replacement surgery has typically included one fee for the surgeon, another for the anesthesiologist, and another for the attending internist. A per-case or perday fee is paid to the hospital for its staffing and facilities and a supplemental fee covers the implanted artificial knee. Additional fees are paid for exceptionally long hospital stays, readmissions to the hospital, use of a nursing home, and physical therapy offered in an ambulatory clinic.

    Fee-for-service reimbursement encourages the adoption...

  9. 4 The Hospital as Purchaser
    (pp. 79-99)

    Hospitals historically competed for patient admissions by competing for physician affiliations, using technology as the preferred weapon in what became known as the “medical arms race.”¹ Doctors wanted new and better facilities, equipment, staffing, and supplies, and the hospital provided them. The medical arms race accelerated the diffusion and thereby the development of medical technology. Rapid adoption provided manufacturers the revenues needed to sustain investments in research. Hospitals also served as a locus for innovation, encouraging physicians to experiment with new designs, materials, and procedures. But there can be too much of a good thing. The medical arms race spurred...

  10. 5 Organizational Capabilities for Technology Purchasing
    (pp. 100-119)

    The transformation of the hospital is one of the most important developments in the market for medical technology, but individual facilities vary in their capabilities to serve as effective purchasers. They seek to hone skills in technology assessment, develop contractual relationships with suppliers, negotiate acceptable prices, and coordinate the patient’s course of care. Scale and scope are essential, as is the institution’s alignment with its medical staff. Physicians historically enjoyed the medical arms race, playing one hospital off against another to obtain the latest equipment and facilities, and some still prefer the traditional style of practice. But physicians now face...

  11. 6 The Patient as Purchaser
    (pp. 120-140)

    The value of a medical technology depends importantly on the choices and actions of the patients who use it, on healthy personal behaviors, shared decision-making with physicians, adherence to evidence-based protocols, self-monitoring, and active participation in recovery and rehabilitation. The patient is a member of the clinical team, and not merely its subject. Increasingly, the patient is also a payer and a purchaser. This chapter begins with the evolution of the patient from a passive recipient of health services to an active participant in the process of care. It then analyzes the structure of consumer cost sharing and the incentives...

  12. 7 Implications for the Medical Technology Industry
    (pp. 141-152)

    Value-based purchasing has important implications for the medical technology industry. Established methods of design, manufacturing, marketing, and distribution will not work well in the future. Changes on the demand side of the market force commensurate changes on the supply side. Technology firms will need to find new ways to collaborate with the FDA, insurers, hospitals, physicians, and patients themselves. Developers will supplement premarket assessments with evidence from postmarket surveillance and from studies of comparative clinical effectiveness. They will be able to charge premium prices for breakthrough innovations but will be forced to price competitively for follow-on products and incremental innovations....

  13. NOTES
    (pp. 153-168)
  14. INDEX
    (pp. 169-172)