Innovation: Health Reform’s Last Great Hope for Reducing Costs and Improving Care

Despite passage of the Patient Protection and Affordable Care Act, there is still need for health reform that will slow the rate of growth of expenditures. Regardless of whether that reform involves a much larger role for government or is more market oriented, a shift in emphasis toward more value-oriented innovations is necessary and perhaps inevitable.

Victor Fuchs, PhD, “New Priorities for Future Biiomedical Innovations, “ NEJM, August 19, 2010

No matter how you slice the $2.5 trillion national health expenditure pie, innovation is the last great hope for reducing health costs, improving care, and saving lives.

You see this hope expressed:

• in the reform act , which establishes a Center for Innovation for Medicare and Medicaid, and which proposes innovations which authorizes new innovative care and pay models to save money by rationalizing care;

• in the $852 billion stimulus bill, which threw $27 billion at electronic records, which will purportedly will pay back those billions;

• in the appointment of Doctor Donald Berwick, who 22 years ago founded the Health Improvement Institute, and in that position, prevented 122,300 “unnecessary deaths” by improving hospital safety;

• in efforts of private industry to introduce systematic changes and disruptive innovations to replace the old ways of doing things.

The Catch

There’s a catch, of course. The catch is that innovations to date have usually increased costs while improving quality. If you doubt me, cast your eyes over this list of 10 innovations doctors voted as the most noteworthy over the last 2 decades.

1. MRI and CT scans

2. ACE inhibitors and angiotensin antagonists

3. Coronary stents

4. Statins

5. Mammography

6. Coronary bypass surgery

7. Proton pump inhibitors and H2 blockers

8. Antidepressants

9. Cataract extraction and lens implants

10. Hip and knee replacements

Or take the latest highly touted innovation- robot-assisted surgery. If robots were to replace conventional surgeries, it would cost the system $2.5 billion annually.

It can be argued these innovations relieve pain, restore function, and extend life, but is hard to make the case they decreased overall costs. Since 1977, federal cost expenditures have increased by 410%, and state, local, and private expenditures by 250% compared to about 155% for GDP expenditures.

The point is: key innovations almost never simultaneously increase quality while decreasing costs. Instead, new innovations invariably increase both quality and costs.

A compromise solution would be to introduce innovations that substantially decrease costs while holding quality constant.

Until this happens, the only answer to decreasing costs and decreasing their growth rate is paying hospitals and doctors less – the fundamental long term strategy embodied in the new health law.

In the end, America voters ,i.e., health consumers, patients - not politicians, Medicare officials, and health professionals - will resolve the quality/cost quandary. Voters who ultimately foot the bill will have to decide what constitutes “quality” – relief of pain, restoration of function, cure or amelioration of disease, access to doctors and procedures , and the importance of comparative outcomes, and whether government or market forces offer the best hope for resolution.

References

V. Fuchs, “New Priorities for Future Biomedical Innovations,: G.I, Barbash and S.A. Gleid, “New Technology and Health Care Costs – The Case of Robot-Assisted Surgery,” “Facing the Wild West of Health Care Reform,” NEJM, August 19, 2010.