Tuesday, March 13, 2007

How changes in medical technology affect health care costs

A very interesting article on the impact of new medical technology on health care cost is found here: How changes in medical technology affect health care costs

The long and the short of it is that the effects of new technologies on costs are complex, because while they may save costs in regards to existing conditions they also increase costs in terms of allowing new conditions to be treated.

Evaluating the impact of new innovation can be complicated. For example, a case study that focuses on a single technology or disease may show cost savings based on the costs and benefits of the new technology if it replaces a more expensive technology and provides health improvements, while an analysis of health care system-wide costs may show cost increases if the new technology results in greater utilization than the old. A specific example is anesthesia, where substantial innovations have occurred in recent years. Better anesthetic agents and practices have reduced the burden of surgery on patients, producing faster patient recoveries, shorter hospital stays, and fewer medical errors. These changes reduce the cost per patient compared to surgery in the absence of these changes. At the same time, these innovations also make it possible to perform surgeries on patients who previously would have been considered too frail to undergo the surgery; this adds to the amount of health care that is delivered system-wide, thus perhaps increasing total health care spending.

This is a reason to be cautious when it is claimed that a new medical technology ought to be pursued because it will save costs. It is also a reason to think that impact on health costs should be a strong consideration when deciding what research to fund. Daniel Callahan has an excellent paper on this called "How Much Medical Progress Can We Afford? Equity and the Cost of Health Care" in the Journal of Molecular Biology.

Hat tip to Ethical Technology for the original post.