June 1, 2010
The blogosphere has been driven into a foment over the last week or so by a paper by Groeneveld et al entitled ‘Increasing Use of Cardiovascular Devices and Rising Health Costs’. Its conclusions are interesting but, I suggest, not conclusive of anything which should prompt policy makers to ask further questions. Discounted for inflation the study shows a very small increase in treatment costs per patient and it is far from clear whether this includes value created by more effective devices which both have a longer lifespan and reduce supplementary costs associated with managing the patient’s condition. My guess is that like many studies the costs and benefits have been somewhat narrowly defined.
Conventional Health Technology Assessment (HTA) has one serious flaw which is often overlooked: that is its ability to capture the full cost of not treating the patient in terms of both quantitative and qualitative measures of broader social impact. By this I mean the cost of untreated people being out of the workplace (and not contributing taxes) and the cost to family and social services of looking after the patient at home. These elements of the value proposition are difficult to measure but they do equate to real money. The softer stuff, in terms of mental and secondary physical well being of people able to return to a normal life is much more difficult for HTA processes to capture but is no less important to the individual patient.
What this study does show is the overwhelming role of demand in inflating healthcare costs. The fact that there are patients that need treating in a rapidly ageing society should come as no surprise nor is the expectation that individuals will be looked after when they get sick. The macro-economic and political challenge is how to respond to these changing dynamics without returning to the healthcare of the 1950’s and associated morbidity and mortality. This is not a politically attractive prospect. Blaming the suppliers of life-transforming treatments is tempting for politicians and policy makers but the bulk of the cost problem in modern healthcare systems remains that it is highly labour intensive (70% of most developed nation’s costs are people). This is compounded by the fact that healthcare professionals are increasingly in short supply. The obvious answer is to look for technologies that enable governments to fundamentally restructure care in order to reduce total costs whilst improving quality. That may in some small way compensate for the rising demand which is largely a product of our own success in increasing life expectancy and child mortality.
Finally, a simple analogy to illustrate the issue: When I was a young manager I remember two things vividly. One was my boss saying that he was not going to sanction the purchase of more than two or three new fangled personal computers in our business (two hundred people). The second was that I had my own secretary as did most of my colleagues stretched down a long corridor. When I left my last corporate job, responsible for a €300 million business in Europe, I shared one secretary/personal assistant with five senior reports. This is the transformational effect of technology on the cost of doing business and this was repeated in manufacturing, supply chain, research and development etc. No smart CEO suggests that investment in information technology should go back to the levels of the 1980s. They would soon be out of business and out of a job. Healthcare has yet to learn this lesson or develop the tools to identify which investments bring the biggest returns. It is still in the mode of throwing people at the challenge and this must change.
John WilkinsonAuthor : MedTech Europe