Wednesday, December 2, 2009

Clinical Innvotation - Health Reform and Innovation

I received a phone call today from a reporter who was writing a story for a Heartland Institute publication, Health Care News. The Heartland Institute is a conservative think tank engaged in many issues including health reform.

The reporter wanted to know how current health care bills might impact health reform. My short answer was, “Negatively.”

The web of rules and regulations makes innovations difficult for various reasons:

1) the proposed heavy taxation of business enterprises - medical device makers, drug firms, and large and small employers;

2) the uncertainties of Medicare and health plan payments for new innovations;

3) the hesitancy of venture capitalists in financing new ventures;

4) the perceived anti-business climate of the Obama administration.

There may be opportunities if reform goes through as currently convieved The pouring of $19 billion into health information technologies, including EMRs, has some entrepreneurs frothing at the month in anticipation of an IT bonanza. Silicon Valley Internet technology firms are pro-Obama and expect favors from his administration. Besides, if 36 million more people enter the insured ranks, more money will flow into health care. But in general, conservative commentators believe a government command and control health system would discourage innovation.

The reporter went on to ask about innovation trends in health care. As I view the innovation landscape, these are some of the trends I see.

1) Systematic innovation in large integrated health organizations such as Kaiser, Mayo, The Cleveland Clinic, Northwestern Hospital in Chicago, and certain academic institutions like Johns Hopkins, Duke, Vanderbilt, and the University of Pittsburgh. All of these entities and others are part of something called the innovation learning network, headquartered at Kaiser.

2) Disruptive Innovations with less costly, more convenient, and more predictable services in decentralized settings – retail clinics, worksite clinics, audiovisual and electronic monitoring and tests in the home, and even distant evaluation and physical examination and follow up of patients.

3) Health information technology innovations – with patient-generated medical histories, distant electronic monitoring of glucose levels and cardiac rhythm disturbances, defibrillation.

4) Continuing miniaturization of various devices, many intravascular, subcutaneous, and anything that lends itself to less invasive procedures.

5) High tech innovations by radiologists (imaging) , orthopedists, ophthalmologists, cardiologists.

6) New business models – medical homes, hospital-doctor organizations with bundling of fees, virtually integrated organization bringing together disparate practices.

7) Predictive modeling and artificial intelligence organizations using data to predictcosts and effective of future events and interventions, and on predicting the consequences of current disease, including the prospects of sudden death and hospitalization.

8) Robotic machines to perform heart, prostate, gynecological and other surgeries.

9) Biotechnology drugs for personalized treatment of malignancies.

10) Stem cell applications and research for diabetes, Parkinsonism, neurodegenerative diseases like multiple sclerosis.

Innovation is the lifeblood of the American economy and the American health system. Most of the world's major medical innovations originate in America. Yet the House and Senate discourage, regulate, tax, or otherwise penalize the wealthy, entrepreneurs, small and large business owners – the sources of most innovation. That is why the American Chamber of Commerce and associations represent manufacturing, small, and large businesses oppose current reform bills. That is why reform, as currently proposed, may be the enemy of innovation.


Michael Kirsch, M.D. said...

Richard, do you think also that the litigious aura hovering over the country is stifling innovation? I strongly suspect that this poses a strong obstacle for pharmaceuticals, device makers and venture capitalists to assume the risks required to develop new and novel products. Your thoughts?

Richard L. Reece, MD said...

Michael: I have not thought this through. Intuitively it would seem malpractice threats may retard innovation, but I have no concrete evidence. Regina Herzlinger of Harvard Business School who teaches a MBA course to doctors who are discouraged in practice and who seek to be entrepreneurs may be the best authority on the effect of malpractice, which drives a lot of doctors out of practice.